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File is attached with questions that need to be solved. I need this answered in two answers Which is the amount that should be paid
File is attached with questions that need to be solved. I need this answered in two answers
Which is the amount that should be paid for a stock that will pay a dividend of $2.68 in one year and $4.75 in two years? After that, the stock price will grow at a constant 5% per year forever. The appropriate discount rate is 12%. Show your answer to the nearest $.01. A firm has the following book-value balance sheet; Debt =$ 25 ,000, Common Stock ($1 par)= 13 and Retained Earnings = $ 28 ,000. The book value of assets is the total of Debt, Common Stock and Retained Earnings. The firm's bonds are currently selling at par and the firm's stock is currently selling for $ 23 . The firm's tax rate is 42 %. What is the value of the firm's tax shield (i.e. the change in firm value due to the use of leverage in the capital structure)? Show your answer to the nearest $1. Virus Stopper Inc., a supplier of computer safeguard systems, uses a cost of capital of 8 percent to evaluate average-risk projects, and it adds or subtracts 2 percentage points to evaluate projects of more or less risk. Currently, two mutually exclusive projects are under consideration. Both have a cost of $ 356 and will last 4 years. Project A, a riskier-than-average project, will produce annual end of year cash flows of $ 97 . Project B, of less than average risk, will produce cash flows of $ 270 at the end of Years 3 and 4 only. To the nearest . 01, list the NPV of the higher NPV project. Note, if the NPV is negative, place a - sign in front of your answer. Which of the following amounts is closest to what should be paid for Overland common stock? Overland has just paid a dividend of $0.69. These dividends are expected to grow at a rate of 6.9% in the foreseeable future. The risk of this company suggests that future cash flows should be discounted at a rate of 9.4%. Show your answer to the nearest $.01. A company has determined that its optimal capital structure consists of 40 percent debt and 60 percent equity. Given the following information, calculate the firm's weighted average cost of capital. Cost of Debt = 6.5%, Tax rate = 40%, Current Stock Price = $24.83, Long Run Growth rate = 5.0%, Next Year's Dividend = $1.90. Show your answer to the nearest .1%. You are offered an investment with returns of $ 1,635 in year 1, $ 3,654 in year 2, and $ 4,858 in year 3. The investment will cost you $ 6,000 today. If the appropriate Cost of Capital (quoted interest rate) is 10.8 %, what is the Profitability Index of the investment? Enter your answer to the nearest .01. The Target Copy Company is contemplating the replacement of its old printing machine with a new model costing $ 603. The new machine will operate for 3 years and then project will be shut down and all equipment sold. The old machine, which originally cost $ 645, has 2 years of depreciation remaining and a current book value of 22% of the original cost. The old machine has a current market value of $ 334 and should be worth $ 265 at the end of 3 years. The new printing machine could be sold for $ 270 in 3 years. If we buy the new machine our inventory levels will go from $600 to $900. Inventory levels will return to normal at the end of the project. Our annual sales will go from $15,000 to $20,000. Target's corporate tax rate is 25 percent. Both machines are in the 3-year MACRS class, with rates of 33% for year 1, 45% for year 2, 15% for year 3, and 7% for year 4. What are the expected Terminal Cash Flows at the end of year 3, if we replace the old printing machine? This could be a cash inflow or a cash outlay. Be sure to use the - sign should this be a cash outflow. Show your answer to the nearest $.01Step by Step Solution
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