BNICE today expects to earn $10 per share every year if all earnings are returned to the shareholders. However, the company considers to retain 25% beginning 2 years from today (at t=2) and will continues thereafter. This opportunity has a potential ROE of 15% starting one year after the investment is made. the required rate of return is 12%. a. Calculate the value of the company's stock as CASH COW (no Growth) b. Calculate the NPV of the Growth opportunities C. Calculate the value of stock if the company invests in this growth opportunity. Blank # 1 Blank # 2 Blank #3 The assistant manager evaluated potential investments-that is, capital budgeting projects-using the firm's average required rate of return R. He produced the following report for the capital budgeting manager: 9% Project NPV IRR Risk $1,000 14% High B -$900 10% Average -$400 Low D 0 12% Average E $200 13% Average The capital budgeting manager usually considers the risks associated with capital budgeting projects before making her final decision. If a project has a risk that is different from average. she adjusts the average required rate of return by adding or subtracting 3 percentage points. If the five projects listed above are independent, what is the discount rate used R and which one() should the capital budgeting manager recommend be purchased after taking risk into account? Explain on your exam paper why, He should accept A, B, and E He should accept B, and E He should accept B, and D only He should accept A, and E only He should accept C, D and E You are trying to determine the appropriate price to pay for a share of common stock. If you purchase this stock, you plan to hold it for 1 year. At the end of the year, you expect to receive a dividend of $2.50 and to sell the stock for $55.5. The appropriate rate of return for this stock is 16 percent. 1. What should be the current price of this stock? 2. What is the growth rate of the dividend if we assume a constant growth rate g forever? 10 de Paragraph BI U