3. Macky Enterprises expects earnings next year of $4.00 per share and has a 40% retention rate, which it plans to keep constant. Its equity cost of capital is 10%, which is also its expected return on new investment. Its earnings are expected to grow forever at a rate of 4.0% per year. If its next dividend is due in one year, what do you estimate the firms current stock $ price to be? Answer in two decimal places

Project A Project B Time 0 -10,000 -10,000 Time 1 5,000 4,000 Time 2 5,000 3,000 Time 3 1,000 10,000 If Wise Guy Inc. uses payback period rule to choose projects, which of the projects (Project A or Project B) will Wise Guy Inc. prefer? Project A Project B Project A and B have the same ranking Cannot calculate a payback period without a discount rate. You own a small piece of commercial land near a university. You are considering what to do with it. You have been approached recently with an offer to buy it for $600,000. You are also considering three alternative uses of the land for yourself: a laundromat, a bakery, and a bike shop. You assume that you would operate your choice indefinitely, eventually leaving the business to your children. Which is the best business? Blank Growth Initial Investment Cash flow in the First Year Cost of capital rate Laundromat $200,000 $35,000 2.0% 7.0% Bakery $750,000 $45,000 3.5% 6.5% Bike Shop $800,000 $40,000 4.5% 7.0%