What is the value of paine corp. common stock

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Nova Corp. has a WACC of 10%. It is evaluating the purchase of a new machine and must choose between two mutually exclusive projects. The first machine, Machine A, requires an initial investment of $14,000 and generates after tax cash flows of $3,000 for each of the next seven years. The second machine, Machine B, requires an initial investment of $21,000 and provides annual after tax cash flows of $4,000 for each of the next 10 years. What is the payback period for each machine? According to the payback method, which machine should the firm buy? Why? 22. a. What drawbacks of using the payback method are illustrated in the previous question? b. What are the positive points of using payback? How can it be helpful to the manager? 23. Paine Corp.'s last annual common stock dividend was $3.75. Dividends have been growing at a rate of 8% and that rate is expected to continue. If the investors required rate of return is 16%, what is the value of Paine Corp. common stock?

Reference no: EM13297803

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