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You have been asked to value a stock that will not pay a dividend until three years from now. At that time you estimate the dividend will be $1.40. You estimate that it will grow by 10% for the two following years and at 5% thereafter. Solve the following using Excel where possible.
1. What is the value of the stock if its beta is 1.2, the risk-free rate is 2% and the risk premium on the market is 5%?
2. What would the value of the stock be at the end of the first year if rates had not changed?
3. What would the capital gains and the dividend yield be for the year?
Your division is considering 2 investment projects, each of require up-front expenditure of $15 million. a. what are the 3 projects NVP assuming the cost of capital is 5%, 10%, 15% b. What are the 2 projects IRR at these same costs of capital?
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The first thing you need to do is probably ask me questions: 1. What questions (and why) might you have before you start your assignment? 2. What would your recommendation be based on?
If an individual employee, age 25, earning $45,000 per year has an opportunity to participate in an employer sponsored 401(k) tax sheltered retirement account with the employer matching the first $1,200 of annual contributions made by the employee,
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