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School

New York University *

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Course

110

Subject

Finance

Date

Nov 24, 2024

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Pages

1

Uploaded by AgentEnergy11479

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40. The risk-free rate is 2.5% and the market risk premium is 9.57%. A stock with a B of 1.72 just paid a dividend of $2.81. The dividend is expected to grow at 24.83% for three years and then grow at 4.94% forever. What is the value of the stock? o .025+(1.72)(.0957) = .1896 ; D1 =2.81 x 1.2483 = 3.5077 ; D2 = 3.5077 x 1.2483 =4.3787 ; D3 = 4.3787 x 1.2483 = 5.4659 ; p_ = D3R(:g) = 2222222 = 37.8247 CHECK THIS ; NPV = 31.7581 % PS30 1. Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more products. The machine cost $1.78 million and created incremental cash flows of $818,882 each year for the next five years. The cost of capital is 8.32%. What is the net present value of the J-Mix 20007? o NPV =11,452,167.5 2. Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more products. The machine cost $1.87 million and created incremental cash flows of $456,164 each year for the next five years. The cost of capital is 10.09%. What is the internal rate of return for the J-Mix 20007 o NPV =1500,528.27 3. Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more products. The machine cost $1.88 million and created incremental cash flows of $606,674 each year for the next five years. The cost of capital is 9.78%. What is the profitability index for the J-Mix 20007 o Pl =-2eLEE - 4 01 Initial Cost
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