What is the market price of stock if market rate of return

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Reference no: EM132001168

1. A proposed project has an initial cost of $38,000 and cash inflows of $12,300, $24,200, and $16,100 for years 1 through 3, respectively. The required rate of return is 16.8 percent.

Based on IRR, should this project be accepted? Why or why not?

A. No; The IRR exceeds the required return by .58 percent.

B. No; The IRR is less than the required return by 1.03 percent.

C. Yes; The IRR exceeds the required return by .58 percent.

D. Yes; The IRR exceeds the required return by about 1.03 percent.

E. Yes; The IRR is less than the required return by .58 percent.

2. Arcs and Triangles just paid an annual dividend of $1.47 a share this year. The company is planning on paying $1.55, $1.63, and $1.65 a share over the next three years, respectively. After that, the dividend will be constant at $1.70 per share per year. What is the market price of this stock if the market rate of return is 11 percent?

A. $13.98

B. $14.07

C. $15.23

D. $17.16

E. $13.10

Reference no: EM132001168

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