1. Assume a stock had an historical equity risk premium of 5.49 percent and a standard deviation of 11.46 percent over the past two decades. What is the 95.4 percent range for the equity risk premium?
2. A firm wishes to maintain an internal growth rate of 9.5 percent and a dividend payout ratio of 42 percent. The current profit margin is 6.4 percent and the firm uses no external financing sources. What must total asset turnover be?
3. You are told that if you invest $12,500 per year for 24 years (all payments made at the beginning of each year) you will have accumulated $504,000 at the end of the period. What annual rate of return is the investment offering?