Question
How much are you willing to pay for one share of Fresh Flowers stock if the company just paid an annual dividend of $2.8, the
How much are you willing to pay for one share of Fresh Flowers stock if the company just paid an annual dividend of $2.8, the dividends increase by 4 percent annually, and you require a return of 14.8 percent?
$26.96
$15.71
$18.33
$17.33
$25.93
You are considering an investment with the following cash flows. If the required rate of return is 15.5 percent, should you accept the investment based solely on the internal rate of return rule?
Year | Cash Flow |
0 | -$100,430 |
1 | 6,000 |
2 | -34,000 |
3 | 140,000 |
| Yes, because IRR > Required return. |
| Yes, because IRR is positive. |
| You cannot apply the IRR rule in this case. |
| No, because IRR < Required return. |
| No, because IRR is negative. |
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