Finance Assignment | Homework For You
You are planning to save for retirement over the next 35 years. To do this, you will invest $710 per month in a stock account and $310 per month in a bond account. The return of the stock account is expected to be 9.1 percent, and the bond account will pay 5.1 percent. When you retire, you will combine your money into an account with a return of 6.1 percent. How much can you withdraw each month from your account assuming a 30-year withdrawal period? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Withdrawal per month Storico Co. just paid a dividend of $2.20 per share. The company will increase its dividend by 20 percent next year and then reduce its dividend growth rate by 5. percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. If the required return on the company’s stock is 13 percent, what will a share of stock sell for today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Stock price Saved After deciding to buy a new car, you can either lease the car or purchase it on a two-year loan. The car you wish to buy costs $33,000. The dealer has a special leasing arrangement where you pay $95 today and $495 per month for the next two years. If you purchase the car, you will pay it off in monthly payments over the next two years at an APR of 5 percent. You believe you will be able to sell the car for $21,000 in two years.
a. What is the present value of leasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. What is the present value of purchasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c. What break-even resale price in two years would make you indifferent between buying and leasing? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
a. Present value of lease
b. Present value of purchase
c. Break-even resale price. Get Finance homework help today
