What is the equivalent annual annuity of this project

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Reference no: EM132069271

a) Assume a company has a current stock price of 40 and will pay 1.80 as dividend in one year; its equity cost of capital is 14%, what price must you expect the stock to sell for immediately after the firm pays the dividend in one year to justify its current price?

b) A company is considering a project with an NPV estimated to be 115 million and a lifetime of 5 years. For this estimation the company employed a discount rate equal to 4%. What is the Equivalent Annual Annuity of this project? (Answers in million)

Reference no: EM132069271

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