1. What techniques should be used to avoid one track thinking and preventing thinking 'out side of the box'?
2. A stock is expected to pay a dividend of $1.00 the end of the year (that is, D1 = $1.00), and it should continue to grow at a constant rate of 5% a year. If its required return is 12%, what is the stock's expected price 5 years from today? Round your answer to two decimal places.
$ ________
3. If your restaurant is projected to generate between $10,000 and $20,000 each year in cash flow for the next 10 years, what would be the maximum amount of money you could borrow if the bank proposed the following terms to you and you needed to pay debt service out of your cash flow? Interest rate: 5%; Term: 10 years; Amortization rate: 30 years.