2. The Bell Weather Co. is a new firm in a rapidly growing industry. The company

Question

2.

The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20 percent a year for the next 4 years and then decreasing the growth rate to 4 percent per year. The company just paid its annual dividend in the amount of $2.70 per share. What is the current value of one share of this stock if the required rate of return is 8.20 percent?

$101.15

$117.93

$141.33

$138.63

$115.23

3.

A project is expected to create operating cash flows of $31,000 a year for three years. The initial cost of the fixed assets is $64,000. These assets will be worthless at the end of the project. An additional $2,500 of net working capital will be required throughout the life of the project. What is the project's net present value if the required rate of return is 15 percent?

A)$3,423.77

B)$5,923.77

C)$2,033.33

D)$8,423.77

E)$4,279.98

The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20 percent a year for the next 4 years and then decreasing the growth rate to 4 percent per year. The company just paid its annual dividend in the amount of $2.70 per share. What is the current value of one share of this stock if the required rate of return is 8.20 percent?

$101.15

$117.93

$141.33

$138.63

$115.23

3.

A project is expected to create operating cash flows of $31,000 a year for three years. The initial cost of the fixed assets is $64,000. These assets will be worthless at the end of the project. An additional $2,500 of net working capital will be required throughout the life of the project. What is the project's net present value if the required rate of return is 15 percent?

A)$3,423.77

B)$5,923.77

C)$2,033.33

D)$8,423.77

E)$4,279.98

Explanation / Answer

2. $ 115.23

3. $ 4279.98

PV of cash flows 31000 * 2.2832(annuity value) = 70779.2

initial investment (66500)

(initial cost + working capital)   

NPV 4279.2

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.