Erau Mbaa518 Module 3 4 Problem Set 3

Question 1 10 pts .instructure.com/courses/31027/quizzes/76976/take#question_1954847_question_text”>Skip to question text.

DBP Inc. just paid a dividend of $1.00. The expected growth rate of dividend is 8 percent. The required return for investors in the first three years is 20 percent and 15 percent for the following three years. After those six years the required return is 10 percent. What is the current share price of the stock?

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Question 2 15 pts .instructure.com/courses/31027/quizzes/76976/take#question_1959681_question_text”>Skip to question text.

Ernie Manufacturing has projected sales of $100 million next year. Costs are expected to be $90 million and net investment is expected to be $5 million. Each of these values is expected to grow at 14 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 6 percent where it will remain. There are 5.5 million shares of stock outstanding. Investors require a return of 13 percent and the corporate tax rate is 40 percent. What is your estimate of the current stock price?

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Question 3 5 pts .instructure.com/courses/31027/quizzes/76976/take#question_1954851_question_text”>Skip to question text.

Given the following cash flows and a discount rate of 13 percent, calculate the NPV.

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Question 4 5 pts .instructure.com/courses/31027/quizzes/76976/take#question_1954853_question_text”>Skip to question text.

Given the following cash flows calculate the IRR: