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1 ) Suppose you plan to start your own business in few years. Based on project sales and costs, you expected that the cash flows
Suppose you plan to start your own business in few years.
Based on project sales and
costs,
you expected that the cash flows over the SIX years life of the business will be as
follows:
Year $
Year $
Year $
Year $
Year $
Year $
It will cost about $ to begin the new business. You use a discount rate to
evaluate new business operation.
What is Present Value
What is NPV
Explain will you suggest to take this project
Instruction: Please show your supportive calculations and brief explanatio
Suppose you invested stock $ Dividend x You intend to hold the
stock for three years. You project you will be able to sell it at the end of year for
$ and required rate of return
What is Present Value?
Question : See PPT slide for this calculation
What is the price in year
Formula : P D gR g
Suppose a company starts to pay dividends for the next three year. After the third year,
the dividend will grow at a constant rate of per year. The required return is
Year Expected Dividend
What is Value of the dividends that will be paid between now and then. So the price in three year is
P D gR g
What is the total value of stock as the present value of the first three dividends plus the PV
of the price at Time P
Po D R D R D R P R
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