What is the project average accounting return

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Q1) You're trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $12.5 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,904,300, $1,957,600, $1,926,000, and $1,379,500 over these four years, respectively, what is the project's average accounting return (AAR)?

Q2) The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.90 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. Investors require a return of 10 percent on the company's stock.

a. What is the current stock price?

b. What will the stock price be in 3 years?

c. What will the stock price be in 5 years?

Reference no: EM133190115

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