Practice Problems for Financials
1. Calculate how much you should pay for an IBM share of stock given the following data:
Current Dividend: $5.50
Growth in Dividend: 7%
RR: 13%
If the price is $82 should you buy it? Why or why not?
2. Calculate how much money you would have at the end of 10 years if you invested $45,000 today in the bank at 13% interest.
3. How much money would you have to invest today if you wanted to have $500,000 in your bank account in 7 years earning 5% a year?
4. If a stock price is $23.00 and your estimates say that it’s only worth $21.00 should you buy it? Why or why not
5. At the end of one year if you invested $4,500 in a CD earning 6%, how much would you have then?
6. If you wanted to have $1000 in your account at the end of year, and you could earn 9% interest, how much would you have to invest today to get this amount?
7. Calculate how much you should pay for a Wal-Mart share of stock given the following data:
Current Dividend: $4.00
Growth in Dividend: 2%
RR: 10%
If the price is $110 should you buy it? Why or why not?