1. What should the price of the following stocks be? In each case, the OCC is 10%.
(a) Expected dividend in one year is $5 and is constant forever.
(b) Expected dividend in one year is $5 and grows at 2% forever.
(c) Expected dividend in one year is $5, in two years $4, in three years $2.5, and grows at 2% forever after.
(d) Dividend just paid is $5 and is expected to grow at 2% forever.
2. Classic Floors has the following inventory data: July 1 Beginning inventory 30 units at $6.00 5 Purchases 120 units at $6.60 14 Sales 80 units 21 Purchases 60 units at $7.20 30 Sale 56 units Assuming that a perpetual inventory system is used, what is the value of ending inventory on a LIFO basis for July?