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QUESTION

Show work if possible. Thank you!You have a balance of $2,000 on your credit card and your monthly minimum payment is $35.

Please help me solve these Finance questions. Show work if possible. Thank you!

1.     You have a balance of $2,000 on your credit card and your monthly minimum payment is $35. The credit card company charges an APR of 18%, compounded monthly. If you just make the minimum payment and do not add additional charges on the card, how long it takes you to pay the balance off? (round to the nearest month)

a.      42 months

b.     58 months

c.      131 months

d.     Never

e.      None of the above

2.     The Jones Company has decided to undertake a large project. Consequently, there is a need for additional funds. The financial manager plans to issue preferred stock with a perpetual annual dividend of $5 per share. If the required return on this stock is currently 20 percent, what should be the stock's market value?

a.      $150

b.     $100

c.      $  30

d.     $ 25

e.      None of the above

3.     Netscrape Inc. just paid a dividend of $1.00 per share. The dividends are expected to grow at 20% rate for the next three years and then level off to a 4% rate indefinitely. If the required return is 12%, what is the value of the stock today?

a.      $15.00

b.     $16.20

c.      $19.44

d.     $22.45

e.      None of the above

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