Waterworks has a dividend yield of 925 If its dividend is expected to grow at a

Waterworks has a dividend yield of 925 if its

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16. Waterworks has a dividend yield of 9.25%. If its dividend is expected to grow at a constant rate of 6.25%,what must be the expected rate of return on the company’s stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 17. Computer Corp. reinvests 50% of its earnings in the firm. The stock sells for $70, and the next dividendwill be $3.50 per share. The discount rate is 15%. What is the rate of return on the company’s reinvestedfunds? (Do not round intermediate calculations. Round your answer to 2 decimal places.) The following are the cash flows of two projects:YearProject AProject B0−$350 −$350 1180 250 2180 250 3180 250 4180 18. What is the payback period of each project? (Round your answers to 2 decimal places.) 19. The following are the cash flows of two projects:YearProject AProject B0−$280 −$280 1160 180 2160 180 3160 180 4160 a.If the opportunity cost of capital is 10%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.)
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b.Does the profitability index rank the projects correctly? 20. The following are the cash flows of two projects:YearProject AProject B0−$220 −$220 1100 120 2100 120 3100 120 4100 a.Calculate the NPV for both projects if the discount rate is 10%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b.Suppose that you can choose only one of these projects. Which would you choose? The following table presents sales forecasts for Golden Gelt Giftware. The unit price is $40. The unit cost of the giftware is $20.YearUnit Sales134,000 242,000 316,000 410,000 Thereafter0 21. It is expected that net working capital will amount to 20% of sales in the following year. For example, thestore will need an initial (year-0) investment in working capital of .20 × 34,000 × $40 = $272,000. Plant and
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equipment necessary to establish the Giftware business will require an additional investment of $212,000. This investment will be depreciated using MACRS and a 3-year life. After 4 years, the equipment will have an economic and book value of zero. The firm’s tax rate is 30%. What is the net present value of the project? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.)
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