Question

1. WinesDirect Ltd generated an EPS this year of $1.20 and paid a dividend of $0.70 per share. WinesDirect has recently been able to generate a return of 9.25% p.a. on its (book) equity base. If these numbers are assumed to be fairly stable, what will be WinesDirect's expected future growth rate?

1. 9.25%
2. 4.80%    
3. 4.25%
4. 3.85%
5. None of the above

2. What is the future value of a $3,000 invested for 20 years at an interest rate of 12% p.a. compounded quarterly? (Rounded to the nearest dollar.)

1. $28,923
2. $29,923
3. $30,923
4. $31,923
5. None of the above

3. Tricky Traps manufactures an innovative mouse trap. Sales this year are $650,000. The company expects its sales to go up to $900,000 in six years. What is the expected annual average growth rate in sales for this company? (Rounded to the nearest percent).

1. 9%
2. 8%    
3. 7%
4. 6%
5. None of the above

4. If you require a 12% rate of return, how much would you pay now for a bond with a face value of $6,000, pays $160 interest each year and matures in 10 years' time? (Round your answer to the nearest $10).

1. $2,840
2. $2,850
3. $2,860
4. $2,870
5. None of the above

5. Eclipse Textile Company Ltd generated an EPS this year of $4.30 and paid a dividendof $1.65 per share. Eclipse Textile Company has recently been able to generate a return of 13.50% p.a. on its (book) equity base. If these numbers are assumed to be fairly stable, what will be Eclipse Textile Company's expected future growth rate?

1. 9.25%
2. 8.32%    
3. 7.32%
4. 7.58%
5. None of the above   

** Please show the all mathematical steps and the Financial Calculator step if possible, Thanks.

Answer 1

Dividend payout ratio = dividend / EPS = 0.7/1.2=0.5833

Growth rate=ROE*(1-payout ratio)

growth rate=9.25*(1-0.5833)

growth rate = 3.85

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

Effective Annual Rate = ((1+12/4*100)^4-1)*100

Effective Annual Rate% = 12.55

Future value = present value*(1+ rate)^time

Future value = 3000*(1+0.12550881)^20

Future value = 31923

Please ask remaining parts separately, questions are unrelated. I have done one bonus