A company issued 8.5% preference shares at R80 each. What is the intrinsic value of a preference share assuming a 6.5% required rate of return? ○ a. 94.12 b. R104.62 OC. R123.08 Od. R130.77

Matollows and 250 shillings in the following year. After that, dividends are expected to grow at constant 5% per year. If the required rate of return is 10%, what price should investors pay for such shares today? 4. Suppose a firm is considering a project that would require an initial cash outlay of 15 million shillings and expected to generate shs 4.5 million each year for the next 4 years. The firm assumes that the prices and costs increases at the same rate and that the required rate of return expressed in nominal terms is 14%. The firm also practices a policy whereby cash flows are stated at the prices of period zero. The inflation rate is expected to be 5%. (a)Outline two ways in which the effects that inflation has on the acceptability of investment projects could be considered. (b)Using the NPV technique, is the project worth taking? What have you learned from your analysis as far as treating inflation in investment analysis is concerned? 30/2021 4:39:41 PM Page 1 of 2

The common stock of Eddie's Engines, Inc. sells for $15.75 a share. The stock is expected to pay $0.75 per share next month when the annual dividend is distributed. Eddie's has established a pattern of increasing its dividends by 49% annually and expects to continue doing so. What is the market rate of return on this stock? A. 8.26% B.11.34% C. 10.12% D.14.97% E. 15%

Economics If you invest $10,000 now into a project that will yield net revenues of $1,327 at the end of each year for 12 years, what is the internal rate of return (IRR) of your investment? Oa. 8% Ob. 18%

5. A ceramics manufacturer sold cups last year for P7.50 each. Variable costs of manufacturing were P2.25 per unit. The company needed to sell 20,000 cups to break even. Net income was P5,040. This year, the company expects the price per cup to be P9.O0; variable manufacturing costs to increase 33.3%; and fixed costs to increase 10%. How many cups (rounded) does the company need to sell this year to breakeven? * O 17,111 O 17,500 O 19,250 O 25,667

Brian lives in San Diego and runs a business that sells guitars. In an average year, he receives $733,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $433,000; he also pays wages and utility bills totaling $257,000. He ovwns his showroom; if he chooses to rent it out, he vill receive $13,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Brian does not operate this guitar business, he can vork as a paralegal, receive an annual salary of $23,000 vith no additional monetary costs, and rent out his showroom at the $13,000 per year rate. No other costs are incurred in running this guitar business. Identify each of Brian's costs in the following table as either an implicit cost or an explicit cost of selling guitars. Implicit Cost Explicit Cost The vholesale cost for the guitars that Brian pays the manufacturer The salary Brian could earn if he worked as a paralegal The vages and utility…

Estimate the price impact of a 50-basis point interest rate change using a linear approximation of a 10-year 7% semi-annual coupon bond priced at 97.50. a. 1.72 b. 3.40 C. 3.44 d. 6.80 e. 6.88

Mr. Santos wishes to provide P4,000.00 for his son on his 21st birthday. How much should he deposit every 6 months in a savings bank which pays 4% converted semi-annually, if the first deposit is made when the son is 3 ½ years old? a.P71.55 b.P61.55 c.P51.55 d.P41.55

an investment has been made to an account at a simple interest rate of 12.122% and is expected to earn P350,475 after 8 years and 5 months. if you plan to withdraw all the money on the account at the end of 5 years to start a small business, how much money can you receive? a. 743,512.573 b. 551,715.543 c. 482,510.371 d. 621,387.366

EXAMPLE 5-1 An investment of $10,000 can be made in a project that will produce a uniform annual revenue of $5,310 for 5 years and then have a salvage value of $2.000, Annual disbursements will be $3,000 each year for operation and maintenance costs. The company is willing to accept any project that will earn :0% or more, before income taxes, on all invested capital. Show whether this is a desirable investment by using the present worth method. Draw the cash flow diagram