Q1
Camel Industries is expected to pay an annual dividend of RM1.30 a share next month.
The market price of the stock is RM24.80 and the growth rate is 3 percent. What is the
firm’s cost of equity?
Q2
An investment promises the following cash flow stream: RM1,000 at Time 0; RM2,000 at the
end of Year 1 (or at T=1); RM3,000 at the end of Year 2; and RM5,000 at the end of Year 3.
At a discount rate of 5%, what is the present value of the cash flow stream?
Q3
Recently you invested in a 20-year asset that pays you RM100 at t = 1, RM500 at t = 2,
RM750 at t = 3, and some fixed cash flow, X, at the end of each of the remaining 17
years. You purchased the asset for RM5,544.87. Alternative investments of equal risk
have a required return of 9%. What is the annual cash flow received at the end of each
of the final 17 years, that is, what is X?
Q4
You deposit RM1,000 in a bank account that pays 6% nominal annual interest, compounded
monthly. How much will you have in your account after 3 years?