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6. The dividend yield on Super Factory Corporation common stock is 5.2 percent. The company just paid a $2.50 annual dividend and announced plans to
6. The dividend yield on Super Factory Corporation common stock is 5.2 percent. The company just paid a $2.50 annual dividend and announced plans to pay $3 next year. The dividend growth rate is expected to remain constant at the current level. What is the required rate of return on this stock? (5 points) 7. Mac Corp. currently has an EPS of $4, and the benchmark PE for the company is 20 . Earnings are expected to grow at 5 percent per year. a. What is your estimate of the current stock price? ( 2 points) b. What is the target stock price in one year? ( 3 points) 8. Consider a project with an initial investment of $5,000, and future cash inflows of $600 per year for ten years. The IRR of the project is equal to the required rate of return. What is the NPV? (5 points) 9. Consider a project with the following cashflows. What is the IRR? For which required rates of return would you take this project? (5 points)
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