Question
Question 17 Linda is saving for retirement and would like to accumulate $800,000 at her retirement. She currently has $30,000 saved and would like to
Question 17 Linda is saving for retirement and would like to accumulate $800,000 at her retirement. She currently has $30,000 saved and would like to work for another 25 years. She plans to save $3500 at the end of each year over the next 25 years. What rate of return must she earn on her investments over the next 25 years?
10.95% |
12.45% |
8.76% |
7.23% |
9.42% |
Question 18 Consider two projects:
Project A Project B
PP 2.8 years 3.0 years
IRR 12.5% 13.3%
NPV -$15,500 -$16,900
Assume that the projects both have a required return of 15% and a critical acceptance level (T) of 3.25 years. If these are independent projects we should
Take both projects A and B |
Take project B and reject project A |
Take neither project |
Take project A and reject project B |
Question 20 Your firm wants to raise $4924796 by issuing preferred stock. The stock has a par value of $50 and pays a 6% dividend, how many shares must be issued if the required return is 10% (ignore costs associated with issuing the shares known as floatation costs -- round to the nearest share)?
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