1.A machine with the initial investment of Rs.150,000 and projected life of 5 Years is forecasted with following cash inflows; (Marks-4)

YearCash Inflows

130,000

232,000

340,000

435,000

555,000

Calculate;

a)Payback Period.

b)Discounted Payback Period. Take r=16%

c)Net Present Value.

d)Profitability Index.

e)Internal Rate of Return.

f)Should the project be accepted or not? Decide based on IRR.

2.The Yasnaya Company has recently discovered a type of rock which, when crushed, is extremely absorbent.It is expected that the firm will experience (beginning now) an unusually high growth rate (15%) during the period (3 years) when it has exclusive rights to the property where this rock can be found.However, beginning with the fourth year the firm's competition will have access to the material, and from that time on the firm will assume a normal growth rate of 5% annually.During the rapid growth period, the firm's dividend payout ratio will be relatively low (10%), to reserve funds for reinvestment. However, the decrease in growth will be accompanied by an increase in dividend payout to 50%.Last year's earnings were $3.00 per share (E0) and the firm's cost of equity is 14%.What should be the current price of the common stock?

3.The Pochinki Auto Parts Company has just recently been organized.It is expected to experience no growth for the next 3 years as it identifies its market and acquires its inventory.However, Club will grow at an annual rate of 7% in the fourth year and, beginning with the fifth year, should attain a 5% growth rate which it will sustain thereafter.The last dividend paid was $0.75 per share.Club has a cost of capital of 13.50%.What should be the present price per share of Club common stock? And what should you do if it is currently selling at Rs.35.