13. Retro Mechanics Co.is considering opening a new outlet that will cost $7,500,000. The outlet is expected to generate positive cash flows over the next four years in the amounts of four. Retro's required rate of return is 10%. What is the IRR of this project? $4,000,000 in year one, $2,000,000 in year two, S1,000,000 in year three, and $750,000 in year A) 0.00% B) 1.84% C) 3.68% D) 6.13% ANSWER: 14. Pancake Co. paid a dividend of S52.5 on its common stock yesterday. The company's dividends are expected to grow at a constant rate of 5% indefinitely. The required rate of return on this stock is 12%. You observe a market price of $750 for the stock. Should you purchase this stock? A) No, the market price is above the intrinsic value of the stock. B) Yes, the market price is below the intrinsic value of the stock. C) No, the growth rate in dividends is too far below the required retum. D) Yes, but only if you can keep the stock for at least 5 years