What is profitability index of the project

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Reference no: EM132018173

1. Safeco is expected to pay a dividend of $1.50 next year and $2.00 in the following year, and $2.50 in the following year. Analysts believe that Safeco will hit their price target of $85.75 in three years. What is the value of Safeco stock if your required return is 8.5 percent?

2. A project has an initial outlay of $1,262. It has a single payoff at the end of year 8 of $7,370. What is the profitability index (PI) of the project, if the company’s cost of capital is 5.48 percent? Round the answer to two decimal places.

Reference no: EM132018173

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