Question

I am looking at a stock whose price is $45.00. I want a return of at least 8% and I expect to hold the stock for 5 years and expect the stock to reach $60. The stocks beta is 1.25. Calculate the stocks PV. Should I buy the stock?

Answer 1

Is needed calculate the present value in excel, PV=(rate,nper,pmt,fv) in this case the final result is $40.83

Answer 2

25262

Answer 3

Find the beta for the following stocks: IBM, Apple, WalMart, Microsoft, and Dell.

2. I am looking at a stock whose price is $45.00. I want a return of at least 8% and I expect to hold the stock for 5 years and expect the stock to reach $60. The stocks beta is 1.25. Calculate the stocks PV. Should I buy the stock?

3. If the stock is also pays a dividend of 2.00 per year. Should I buy it?

4. A stock is selling for $35.00. The stock’s value is expected to grow by 10% per year. It has a beta of 1.0

a) I expect to sell the stock in 5 years; what will it be worth then?.

b) I want a return of 9% -- Should I buy the stock?

c) The Stocks beta increases to 1.2 should I still buy the stock?

e) The stock pays a dividend of $1.00 per year. Should I buy it now?

Your answers must be sent as an Excel File posted to Blackboard. I must see the formulas of how you calculated