Q2. A company has an odd dividend policy. The company will pay a dividend of $3 per share next year and has announced that it will increase the dividend by $5 per share for each of the subsequent four years and then maintains a constant 2% growth rate. If you require a return of 8 percent on the companys stock. A. How much will you pay for a share today? B. At the price you are willing to pay for, what is the dividend yield in the first year?

Q3. A project has the following cash flow with a discount rate of 12%: Annual cash flows: Year 0 $ -520,000 Year 1 $ 170,000 Year 2 $ 210,000 Year 3 $ 225,000 Year 4 $ 195,000 $520,000 is used in purchasing an equipment for the project only. Compute the following:

A. Payback period;

B. Discounted Payback period;

C. NPV;

D. Profitability Index;

E. Average Accounting Return, assuming that the cash flow shown is the income before tax and depreciation and ignoring the tax effects.

F. Should the project be accepted. Explain.