Hi,

Looking for help in answering these questions using the BA II Plus calculator (if simplest). If you can answer both that would be great! Please provide step by step and answer.

Question 1:

ABC Co. has been hit hard due to increased competition. The companys analysts predict that earnings (and dividends) will decline at a rate of 5% annually forever. Assume that r = 8% and Div₀ = $2.00. What will be the price of the companys stock 3 years from now?

Question 2:

XYZ is considering a project that has an up-front cost and a series of positive cash flows. The projects estimated cash flows are summarized below:

Project Year Cash Flow

0 ?

1 $400 million

2 $600 million

3 $300 million

4 $500 million

The project has an exact payback of 2.85 years. What is the projects internal rate of return (IRR)?

Thanks!