1. One of your companies that you are planning to sell paid a dividend today of $4.00 per share. It will pay a dividend at the end of next year and at the end of every year thereafter, but the dividend per share is expected to grow at 4% per year. The appropriate risk adjusted discount rate is 10% per year. What is the value per share of your subsidiary? a.$52 b. $58 c. 53.43 d.69.33
2. Your company has 5 delivery trucks that are getting old and only have two years of useful life left in them. As they are not fuel efficient and need a lot of repairs, they generate a net cash flow for the firm of only $25,000 per year. 5 new trucks will cost $25,000, but they will generate a net cash flow for the firm of $75,000 per year for 5 year. At the end of 5 years they will no longer be usable and will have no value. If the appropriate risk adjusted discount rate is 8% what is the net present value of the project? a. ($8,948) b. $9,489 c. $4872 d. 12,554