Washington-Pacific invests $2 million to buy a tract of land and plant some young pine trees. The trees can be harvested in 14 years, at which time W-P plans to sell the forest at an expected price of $4 million. What is W-P’s expected rate of return? Round your answer to two decimal places.

%

You have $45,886.53 in a brokerage account, and you plan to deposit an additional $6,000 at the end of every future year until your account totals $350,000. You expect to earn 8.1% annually on the account. How many years will it take to reach your goal? Round your answer to the nearest whole.

Washington-Pacific invests $2 million to buy a tract of land and plant some young pine trees. The trees can be harvested in 14 years, at which time W-P plans to sell the forest at an expected price of $4 million. What is W-P’s expected rate of return? Round your answer to two decimal places.

%

You have $45,886.53 in a brokerage account, and you plan to deposit an additional $6,000 at the end of every future year until your account totals $350,000. You expect to earn 8.1% annually on the account. How many years will it take to reach your goal? Round your answer to the nearest whole.

years

Assume you are given the following relationships for the Clayton Corporation:

Sales/total assets

1.7

Return on assets (ROA)

3%

Return on equity (ROE)

9%

Calculate Clayton’s profit margin. Round your answer to two decimal places. %

Calculate Clayton’s debt ratio. Round your answer to two decimal places. %

The current price of a stock is $35, and the annual risk-free rate is 3%. A call option with a strike price of $30 and 1 year until expiration has a current value of $6.00. What is the value of a put option written on the stock with the same exercise price and expiration date as the call option? Round your answer to the nearest cent.

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Assume that the average firm in your company’s industry is expected to grow at a constant rate of 4% and that its dividend yield is 7%. Your company is about as risky as the average firm in the industry, but it has just successfully completed some R&D work that leads you to expect that its earnings and dividends will grow at a rate of 50% [D1 = D0(1 + g) = D0(1.50)] this year and 25% the following year, after which growth should return to the 4% industry average. If the last dividend paid (D0) was $2, what is the value per share of your firm’s stock? Round your answer to the nearest cent. Do not round your intermediate computations.

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Stock R has a beta of 2.1, Stock S has a beta of 0.60, the expected rate of return on an…