1. Small businesses typically need the guarantee of owners for bank loans and lines of credit. What is the difference between a line of credit and a bank loan?
2. Hastings Entertainment has a beta of 0.71. If the market return is expected to be 17.50 percent and the risk-free rate is 8.50 percent, what is Hastings’ required return? (Round your answer to 2 decimal places.)
3. A perpetuity paying $404 per year with the first payment due in one year has a present value of $7345.45. What most be the value of the a similar perpetuity if the first payment is instead due in sixteen years. The answer is $3290.27. How to calculate this result?