Question

I need help with answering number 17

11) Rylan Industries is expected to pay a B-2 nes is expected to pay a dividend of $5.40 year for the next four years. If the current price yan stock is $32.16, and Rylan's equity cost of capital is 14%, what price would you expect Rylan's stock to sell for at the end of the four years? A) $22.19 11) B) 577.67 C) $27.74 D) $49.93 Gremlin industries will pay a dividend of Su r Share this year. It is expected that this dividend W grow by 7% per year each year in the future. The current price of Gremlin's stock is $22.30 per share. What is Gremlin's equity cost of capital? A) 19% B) 14% C) 17% D) 15% 13) A company has stock which costs $44,00 per share and pays a dividend of $2.80 per share this year. The company's cost of equity is 8%. What is the expected annual growth rate of the company's dividends? A) 3.28% B) 4.92% C) 1.64% D) 6.56% 12) 14. Two mutually exclusive investment opportunities require an initial investment of 58 million. Investment A pays $1.9 million per year in perpetuity, while investment B pays $1.3 million in the first year, with cash flows increasing by 4% per year after that. At what cost of capital would an investor regard both opportunities as being equivalent? A) 14% B) 13% D) 6% 14) C) 3% 3, Chittenden Enterprises has 626 million shares outstanding. It expects earnings at the end of the year to be 5980 million. The firm's equity cost of capital is 10%. Chittenden pays out 30% of its earnings in total: 20% paid out as dividends and 10% used to repurchase shares. If Chittenden's earnings are expected to grow at a constant 4% per year, what is Chittenden's share price? 15) - A) $3.92 B) $7.83 C) $15.66 D) S2.35 16) What is the internal rate of retum (IRR) of an investment that requires an initial investment of S9000 today and pays $12,870 in one year's time? A) 40% B) 43% C) 46% D) 47% 16) 17) Consider the following two projects: 17) Project Year Year 1 Year 2 Year 3 Year 4 Disco Year Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow Rate A - 100 40 60 50 N/A 0.15 B - 73 30 30 .15 30 300 The payback period for project B is closest to A) 2.7 years B) 2.2 years C) 1.9 years D) 2.4 years 18) A delivery service is buying 600 tires for its fleet of vehicles. One supplier otters to supply the tires for $85 per tire, payable in one year. Another supplier will supply the tires for $15,000 down today. then $45 per tire, payable in one year. What is the difference in PV between the first and the second offer assuming interest rates are 7.9%? A) $2897 B) $7243 C) $10,864 D) -$10,864 101 19) A company buys a color printer that will cost $20,000 to buy, and last 5 years. It is assumed that it will require servicing costing $500 each year. What is the equivalent annual annuity of this deal, given a cost of capital of 12%? A) -$6048 B) -$4839 C) -$5443 D) -54234 YTM of ten-year $10,000 bad with Traces for a price of 593079 X bond with a 58% coop 77390.82

Answer 1

rate positively ..

	Project B
year	Cashflow	Cumulative cash flow
0	-73	-73
1	30	-43
2	30	-13
3	30	17
4	30	47
Payback period =		2+13/30
		2.4	year
Ans = option D) 2.4 year