How much do you need to invest today

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Q1. COM-USA Inc. has been maintaining growth rate of 4% in its dividends, which is expected to continue indefinitely. The company just paid a dividend of $3.00 per share and its stock is priced at $100 per share. What is the required rate of return for COM-USA stock?

A. 20.00%

B. 9.56%

C. 10.69%

D. 7.12%

E. 3.00%

F. 3.12%

How many years will it take for $2,000 to grow to $5,000 at a rate of 3% compounded every hour(Note: There are 365 days in a year)?

A. 21.59

B. 22.98

C. 26.56

D. 33.54

E. 32.56

F. 31.65

G. 20.56

H. 30.54

Q2. The Mitec Inc. is planning to purchase a new production machine. The startup cost of purchasing and installing the machine is $1,000,000. The machine will generate revenue of $500,000 each year for the next 10 years, and all costs including costs of raw materials, labor, utilities, and taxes are $300,000 per year. The machine will require maintenance at the end of every two years, costing $100,000 each time. At the end of the ten years, the company needs to spend $50,000 to divest the machine. The cost of capital for this project is 6%.

What is the IRR of this project?

A. 7.2654%

B. 8.9446%

C. 12.5642%

D. 9.4183%

E. 12.8096%

F. 9.6548%

Q3. You are planning to retire in 35 years with $1,000,000. You can earn 4.0% compounded bi-monthly. How much do you need to invest today?

A. $257,172

B. $212,295

C. $256,023

D. $237,259

E. $253,415

F. $247,745

G. $295,985

H. $297,384

Reference no: EM132606190

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