Some type of replacement chain analysis

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1. Suppose a firm is considering two mutually exclusive projects. One has a life of 6 years and the other a life of 10 years. Would the failure to employ some type of replacement chain analysis bias an NPV analysis against one of the projects? Explain.

2. What is the present value of the following annuity? 1162 every half year at the beginning of the period of the next 7 years, discounted back to the present at 13.70% per year, compounded annually.

3. Reilly Inc. common stock sells for $60/share. The company is expected to pay a $4 dividend next year, which will grow at a 6% rate, forever. Find the required rate of return. Round intermediate steps and your final answer to four decimals. Enter your answer in decimal format (EX: .XXXX).

Reference no: EM132014522

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