1. HAW Inc, may produce either $100,000 of net income or $130,000 of net income, depending on the economic, these profits are the result of annual sales of $1,200,000 or $1,800,000. What is the degree of spreading Leverages?
2. A stock with risk equal to the market is expected to sell for $46 at the end of the year and pay a $2.00 Dividend at that time. If the risk free interest rate is 4% and the market risk premium is 7% what is the likely stock price today?