any expect to the the dividend as percent annual rate for the first three years and at a 10 percent rate for the next two years, and grow the dividend at a 5 percent rate thereafter. This phased- growth pattern is in keeping with the expected life cycle of earnings. You require a 16 percent return to invest in this stock. What is the most you will pay for this stock? 6. CAPITAL BUDGETING: Rojo Software, Inc., has the following projects. Year Project A Project B 0 -$7,500 -$5,000 1 4,000 2,500 2 3,500 1,200 3 1,500 3,000 a. Suppose Rojo's cutoff payback period is two years. Which of these two projects should be selected based on the payback period rule? b. Suppose Rojo's uses Net Present Value (NPV) rule to rank these two projects. If the appropriate discount rate is 15 percent, which project should be selected? c. Compute the internal rate of return (IRR) on for each project. Based on the IRR which project should be selected. Page 9 of 10