----Malcolm Manufacturing, Inc. just paid a $2.00 annual dividend (that is, D0 = 2.00). There will be no dividend payment for the next two years (i.e., at t = 1 and t = 2). In year three (t = 3), the dividend is expected to be $6.00. The dividend will then grow at 10% annually for the next 3 years (i.e., at t = 4, t = 5 and t = 6) and thereafter (i.e., beginning at t = 7) dividends will grow at a rate of 3% annually forever. Assuming a required return of 14%, what is the current price of the stock?

-Consider a project with the following cash flows:

Year t=0 t=1 t=2 t=3 t=4

??? $7,500 $12,500 $15,000 $17,500

The Payback Period of this project is 2.8 years. The appropriate discount rate is 13%. Find the Net Present Value of the project. (Note that the cash flow for t=0 is not provided to you that is, you must first solve for it). -

-If the cost of capital for the project shown below is 3.0 percentage points less than the projects IRR (for example, if the projects IRR is 12.0%, the cost of capital is 9.0%), what is the NPV of the project?

Year Cash Flow

0 ($210,000)

1 $40,000

2 $50,000

3 $60,000

4 $60,000

5 $70,000

6 $70,000