298_Sample_Final

# 298_Sample_Final - CMP 298 Sample Final Quantitative...

This preview shows pages 1–3. Sign up to view the full content.

CMP 298 Sample Final Quantitative Questions 1.a) A project is expected to cost \$200,000 and earn perpetual income of \$20,000 at the end of every year. Set up the equation you would use to find the IRR of this project. b) If the company’s cost of capital is 12%, would you accept or reject this project? Show calculations. c) What is the minimum growth rate in earnings that would be required for the company to accept this project?

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
2.a) This morning a company issued a dividend for \$2.00. Due to impressive market performance, dividends are expected to grow at 10% for the next three years, 8% for the year following, and level off at 5% every year from then on. If the price of one share at the end of the day was \$55.00, set up the equation that would determine the rate of return being demanded by the market. b) If the real return was 9%, was the stock overpriced or underpriced? c) What would your realized rate of return be if you purchased the stock for \$55.00 at the end of the day, and sold it after 4 years (and four subsequent dividends) if you did not
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 02/19/2011 for the course COMM 298 taught by Professor Freedman during the Spring '09 term at UBC.

### Page1 / 6

298_Sample_Final - CMP 298 Sample Final Quantitative...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online