Expected return-equivalently and discount rate

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Reference no: EM132054856

1. A business school is considering building a new Executive Education building. The building will cost $5.2 million, eligible for 100% bonus depreciation, and generate an estimated $1.1 million in revenue with operating costs of $200,000 each year over the next 5 years. The building will have a value of $2.6 million in five years time. If the University has a tax rate of 11%, what is the IRR of the proposal

- 11.8%

- 9.0%

- 11.2%

- 8.6%

- 4.4%

2. If GM Series A preferred shares pay a $4.40 per share dividend in perpetuity, and are trading for $110 per share, what is the yield (equivalently, expected return; equivalently, discount rate) on those shares?

- 4.4%

- 5.5%

- 8.0%

- 4.0%

- 3.2%

Reference no: EM132054856

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