1. Suppose a firm exists for only 3 years. The free cash flow to equity (FCFE) is $1,000,000 at the end of each year. The required return for shareholders is 12%. Assume 100,000 shares outstanding. What should be the share price?
a) $2,401,831 b) $30 c) $24 d) $127
2. A money manager is holding the following portfolio: Stock Amounted Invested Return 1 $300,000 20% 2 $500,000 12% What is the return on this portfolio?
a) 15.00% b) 9.00% c) 8.75% d) 8.00%