Question
1) A firm is evaluating a project with an initial cost of $ 689,736 and annual cash inflows of $ 210,262 per year (first cash
1) A firm is evaluating a project with an initial cost of $ 689,736 and annual cash inflows of $ 210,262 per year (first cash flow to be received exactly one year from today) for each of the next 5 years. If the cost of capital for this project is 8 %, what is this project's NPV?
2) If the returns on Stock A are as follows: Year 1 return = -6 %, Year 2 return = -6 %, Year 3 return = 10 %, Year 4 return = -20 %, and Year 5 return = -18 %, what is the average return for Stock A over this 5 year period? (Record your answer as a percent rounded to 1 decimal place. If your answer is negative, place a minus sign before your number with no space between the sign and the number. For example, record negative 14.284% as -14.3).
3) Robotic Atlanta Inc. just paid a dividend of $4.00 per share (that is, D0 = 4.00). The dividends of Robotic Atlanta are expected to grow at a rate of 20 percent next year (that is, g1 = .20) and at a rate of 10 percent the following year (that is, g2 = .10). Thereafter (i.e., from year 3 to infinity) the growth rate in dividends is expected to be 5 percent per year. Assuming the required rate of return on Robotic Atlanta stock is 8 percent, compute the current price of the stock. (Round your answer to 2 decimal places and record your answer without dollar sign or commas).
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