JB Associates earned a net income of $4.5 million in 2009. The company announced dividends of $0.818 per share, which will grow at a constant rate forever. Given that the weighted average number of common shares outstanding in 2009 is 2.2 million and that the company's book value of equity in 2008 and 2009 is $22 million and $28 million, respectively, its annual growth rate in dividends is closest to?

 

2. Texas & Sons is a circuit manufacturing firm. Its current stock price is $25 with 10 million shares outstanding. It is considering taking a new project that will generate an NPV of $425 million. Calculate the new stock price of Texas & Sons, should it decide to move ahead with the new project.

3. The information regarding a new product that Pivot Inc. is planning to launch is given below:

Price	$5
Variable cost	$2
Fixed Cost	$50,000
Expected units sold in first year	30,000

Given the uncertainty in the units sold in the first year, Pivot wants to know the variability in operating income in the first year. What would be the impact on first year operating income if units sold were 10% higher in the first year?