1.

IRR

Project L costs $58,735.94, its expected cash inflows are $13,000 per year for 10 years, and its WACC is 14%. What is the project's IRR? Round your answer to two decimal places.

2.

Valuation of a constant growth stock

A stock is expected to pay a dividend of $1.75 at the end of the year (i.e., D1 = $1.75), and it should continue to grow at a constant rate of 4% a year. If its required return is 12%, what is the stock's expected price 2 years from today? Round your answer to two decimal places. Do not round your intermediate calculations.

3.

Constant growth valuation

Tresnan Brothers is expected to pay a $3.3 per share dividend at the end of the year (i.e., D1 = $3.3). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 15%. What is the stock's current value per share? Round your answer to two decimal places.

4.

MIRR

Project A costs $1,000, and its cash flows are the same in Years 1 through 10. Its IRR is 18%, and its WACC is 10%. What is the project's MIRR? Do not round off intermediate calculation. Round your answer to two decimal places.

5.

Quantitative Problem 1: Hubbard Industries just paid a common dividend, Do, of $1.50. It expects to grow at a constant rate of 2% per year. If investors require a 8% return on equity, what is the current price of Hubbard's common stock? Round your answer to the nearest cent. Do not round intermediate calculations. per share Zero Growth Stocks: The constant growth mode is sufficiently general to handle the case of a zero growth stock, where the dividend is expected to remain constant over time. In this situation, the equation is Note that this is the same equation developed in Chapter 5 to value a perpetuity, and it is the same equation used to value a perpetual preferred stock that entitles its owners to regular, fixed dividend payments in perpetuity. The valuation equation is simply the current dividend divided by the required rate of retum Quantitative Problem 2 Carlysle Corporation has perpetual preferred stock outstanding that pays a constant annual dividend of $1.30 at the end of each year. If investors require an 7% retum on the preferred stock, what is the price of the firm's perpetual preferred stock? Round your answer to the nearest cent. Do not round intermediate calculations. per share Nonconstant Growth Stocks: For many companies, it is not appropriate to assume that dividends will grow at a constant rate. Most firms go through life cycles where they experience different growth rates during different parts of the cycle. For valuing these firms, the generalized valuation and the constant growth equations are combined to arrive at the nonconstant growth valuation equation: 1+I, Basically, this equation calculates the present value of dividends received during the nonconstant growth period and the present value of the stock's horizon value, which is the value at the horizon date of all dividends expected thereafter. Quantitative Problem 3: Assume today is December 31, 2013. Imagine Works Inc. just paid a dividend of $1.10 per share at the end of 2013. The dividend is expected to grow at 15% per year for 3 years, after which time it is expected to grow at a constant rate of 5.5% annually. The company's cost of equity (rs) is 9%. Using the dividend growth model allowing for nonconstant growth what should be the price of the company's stock today (December 31, 2013)? Round your answer to the nearest cent. Do not round intermediate calculations. per share Check My Work