a . If 40 percent of earnings are paid out in dividends and the discount rate is 11 percent , determine the present value of dividends . Round all values you compute to two places to the right of the decimal point throughout this problem .
b . If it is anticipated that the stock will trade at a P / E of 15 times 2012 earnings , determine the stock ’ s price at that point in time and discount back the stock price for five years at 11 percent .
c . Add together parts a andb to determine the stock price under this combined earnings and dividend model .
6 . A company has $ 200,000 in inventory , which represents 20 percent of current assets . Current assets represent 50 percent of total assets . Total debt represents 30 percent of total assets . What is stockholders ’ equity ?
7 . In the year 2007 , the average firm in the S & P 500 Index had a total market value of fives times stockholders ’ equity ( book value ). Assume a firm had total assets of $ 10 million , total debt of $ 6 million , and net income of $ 600,000 .
a . What is the percent return on equity ?
b . What is the percent return on total market value ? Does this appear to be an adequate return on the actual market value of the firm ?
8 . A firm has the following financial data : Current assets $ 600,000 Fixed assets 400,000 Current liabilities 300,000 Inventory 200,000