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1. Value of Growth Opportunities A firm has projected annual earnings per share of $5.00 and a dividend payout ratio of 65%. The firm's required return is 18% and dividends and earnings are expected to grow at 3% per year indefinitely. For this firm the present value of its growth opportunities is ________.
$49.44
$52.73
$12.22
$37.22
2. Multistage Growth A firm projects that dividends will grow at a rate of 13% per year for four years and then will grow at a rate of 6% per year forever. The stock's required return is 15% and the last annual dividend paid was $1.30. The most an investor should be willing to pay for this stock today is ______. (Watch your rounding, carry out dividends to four or more decimal places.)
$17.31
$19.25
$23.92
$22.59
Risk may be integrated into capital budgeting decisions by Select one: a. adjusting the standard deviation of possible outcomes. b. determining the expected value. Incorrect c. adjusting the discount rate. d. adjusting the time horizon
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what is your net return from this position?
The common stock and debt of Northern Sludge are valued at $56 million and $44 million, respectively. Investors currently require a return of 16.8% on the common stock and 6.9% on the debt. If Northern Sludge issues an additional $20 million of commo..
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