Question
If a project generates cash flow, which can be positive or negative, as shown in the table below (RMB Yuan), is the project financially feasible
If a project generates cash flow, which can be positive or negative, as shown in the table below (RMB Yuan), is the project financially feasible if the market interest rate is 8%? For example, you need to invest 1000 Yuan now and will receive 500 Yuan at the end of the first year.
7. If you want to withdraw ¥5000 from a bank account every year in the next 20 years, and the bank account provides interest rate of 5%, how much money do you need to deposit now?
8. Now is the beginning of the year, a stock will pay a dividend of 5 Yuan at the end of this year. Because the stock is a growth stock, experts predict that the dividend will grow at a rate of 3% per year. If the required return (risk-free rate plus risk premium) on investment of the stock is 10%, what is the current theoretical price of the stock?
Now -1000 1st Year 500 2nd Year -700 3rd Year 1400
Step by Step Solution
There are 3 Steps involved in it
Step: 1
1 To determine if the project is financially feasible we need to calculate the net present value NPV ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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