Consider the following project: Initial outlay = $25 million Year 1 expected cash flow = $5 million Year 2 expected cash flow = $15 million Year 3 expected cash flow = $20 million Project cost of capital = 8% The internal rate of return of this project is closest to (HINT: use excel =IRR() or a financial calculator):

Select one:

A. 3.3%

B. 8.0%

C. 18.9%

D. 22.4%

8.An example of a contingent product is:

Select one:

A. choosing between one of two manufacturing sites.

B. building a new manufacturing plant with optional waste recycling.

C. adding manufacturing capacity to a plant.

D. None of the above.

9.A companys dividend grows at a constant rate of 4 percent p.a.. Last week it paid a dividend of $6.95. If the required rate of return is 18 percent p.a., what is the price of the share 4 years from now? (round to nearest cent)

Select one:

a. $60.40

b. $31.15

c. $58.08

d. $100.10

10.Which of the following best describes the constant-growth dividend discount model?

Select one:

A. It is the formula for the present value of a growing annuity

B. It is the formula for the present value of an ordinary annuity.

C. It is the formula for the present value of a finite, uneven cash flow stream

D. It is the formula for the present value of a growing perpetuity