1. Please show all work with formula used.
Ex: Value of a stock with $1.40 annual dividend and 18% required return.
Ex: Value of a stock with $1.40 annual dividend growing at 2.5% per year and 18% required return.
Ex: Total return on a stock with 4% dividend yield and 8% expected growth rate (i.e. capital gain rate).
Ex: Expected capital gain rate for a stock with current price of $12, required return of 10%, and next expected dividend of $0.30.
2. Jose has $4,000 to invest for a 4-year period. He is looking at four different investment choices. What will be the value of his investment at the end of 4 years for each of the following potential investments?
a. Bank CD at 4.5%.
b. Bond fund at 8.5%.
c. Mutual stock fund at 15%.
d. New venture stock at 24%.