What will be the cash flows of this project in millions

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1. Rose Hill Trading Company is expected to have EPS in the upcoming year of $8. The expected ROE is 18%. An appropriate required return on the stock is 14%. If the firm has a plowback ratio of 70%, its dividend in the upcoming year should be _________.

$1.44

$2.40

$1.12

$5.60

2. Your firm is considering an overseas expansion. Below is the information that you have been given regarding the project: Initial Equipment Cost: $100m. Life of System: 5 years. Depreciation method: Straight line Depreciation. Expected overseas sales: $115m per year. Raw materials: $70m per year. Salaries for new workers: $20m per year. Net Working Capital necessary for plant to operate effectively: $25m (assume that this investment is required at the start of the project and is recovered when the plant shuts down after 5 years.) Marginal Tax Rate on income and capital gains: 40% Expected salvage value of equipment after 5 years: $30m. What will be the cash flows of this project in millions?

A) -100/9.1/9.1/9.1/9.1/28.6

B) -100/26.5/26.5/26.5/26.5/81.5

C) -125/23/23/23/23/78

D) -125/32/32/32/32/75

E) -125/23/23/23/23/66

Reference no: EM132061101

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