You want to invest in a stock that pays a$7.00annual cash dividend for the nextfouryears. At the end of that time, you will sell the stock for$140.00. If you want to earn8%on this investment, what is a fair price for this stock if you buy today?

a.$87.56b.$151.31c.$181.57d.$105.07e.$126.09

Basic discounted cash flow

You notice that the local electric company yesterday paid a$6.00annual dividend on its preferred stock. The current price of the stock is$67. Find the promised rate of return for the preferred stock. a.10.8% b.8.1% c.9.9% d.11.9% e.9.0%

Constant dividend

Nakatomi Trading Corp. just paid an annual dividend of$3.30. If you expect a constant growth rate of 3.8%and havea required rate of return of11.3%, what is the current stock price according to the constant growth dividendmodel? a.$28.31b.$33.98c.$40.77d.$45.67e.$58.71

Constant growth

Yesterday Tyrell Corp paid its annual dividend of$3.90per share and today you wish to purchase the stock at todays quoted price of$48.28. You believe that the dividend growth rate is7.7%. According to the dividend growth model, what is this stock's total expected rate of return? a.18.0% b.19.8% c.16.4% d.21.8% e.24.0% Constant growth unknown r

Sirius Cybernetics Corp does not plan to issue a dividend for9years. On the10thyear, the company plans to issue a dividend of$2.30and expects future dividends to grow by3.6%each year thereafter. If you require a return of7.3%, what is the maximum price you are willing topay today for this stock? a.$68.37b.$32.97c.$56.97d.$47.48e.$39.56 No dividend constant growth

jax Inc. just issued a dividend of$1.81. Investor analysis suggests that the companys dividend will grow based on its historical average over the past 6 years. If you require a return of13.7%per year, what price are you willing to pay for this stock assuming it follows the constant growth dividend model? Please use the historical dividends below to answer this question. 2013:$1.502014:$1.562015:$1.622016:$1.682017:$1.742018:$1.81 a.$32.75 b.$15.79 c.$27.29 d.$19.04 e.$22.74 Find g constant growth

Payback Period Bixby Inc. is evaluating expansion into a new market.The firm estimates an after-tax cost of $1,400,000 and forecast that such an investment will yield after-tax cash flows for 5 years: $600,000 in year 1, $700,000 in year 2, $700,000 in year 3, $200,000 in year 4, and $300,000 in year 5.If the CFO of Bixby has set a required payback period of 2.5 years, what is the project's actual payback period (in years) and should they pursue it? a. 2.5 , then do not purse the project b. 1.9 , then do not purse the project c. 2.5 , then pursue the project d. 2.1 , then pursue the project e. 2.1 , then do not purse the project

Discounted Payback Period The initial outlay or cost for a four-year project is $1,000,000. The respective cash inflows for years 1, 2, 3 and 4 are: $500,000, $300,000, $300,000 and $300,000. What is the discounted payback period if the discount rate is 10%?

Net Present Value Meyer, Inc. is considering a five-year project that has an initial after-tax outlay or after-tax cost of $70,000. The future after-tax cash inflows from its project for years 1, 2, 3, 4 and 5 are all the same at $35,000. Meyer uses the net present value method and has a discount rate of 10%. Will Meyer accept the project?

Unequal lives Bigbox, Inc. is considering two, mutually exclusive projects.Project A is a five-year project that has an initial after-tax cost of $70,000 and future after-tax cash inflows of $35,000 per year for 5 year. Project B has an after-tax cost of $30,000 and future after-tax cash inflows of $25,000 per year for two years.If Bigbox uses the net present value method and has a discount rate of 10%. which project should they choose?

IRR Rogue River, Inc. is considering a project that has an initial outlay or cost of $220,000. The respective future cash inflows from its four-year project for years 1 through 4 are: $50,000, $60,000, $70,000, and $80,000, respectively. Rogue River uses the internal rate of return method to evaluate projects. Will Rogue River accept the project if its hurdle rate is 10%?

Cross over rate Your small business is considering purchasing one of two different computers. Computer A costs $820 today and will increase after-tax revenues by $91 , $254, and $734 over years 1-3 respectively. Computer B costs $690 today and will increase after tax revenues by $451 , $246 , and $89 over years 1-3 respectively. If your firm's financing rate is 12%, what is the cross over rate between these two computers and which should you choose? a.17.9% ,computer B is the better choice b.17.9% , computer A is the better choice c.13.5%, computer A is the better choice d.15.5% ,computer B is the better choice e.13.5% ,computer B is the better choice