What would be the value of the product line

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Reference no: EM132000795

1. Entrepreneurial Inc. is evaluating a new product launch that will cost it $29457 to launch. The company projects it will generate $640015 in annual operating cash flow at the end of each of the next 3 years, after which it will discontinue the product. The appropriate discount rate for the product is 15%.

If after the first year, the product is doing worse than expected, then the company projects annual cash flows will only be $456442 for the remaining two years of the project. What would be the value of the product line at that time (i.e. one year from now) in such a case?

a. $853348

b. $1040478

c. $848450

d. $742042

e. $712585

2. Suppose you received a total of $1233 in dividends plus $16070 in proceeds from selling 450 shares of Apple Inc. that you had bought at $29.96 a share. What is your capital gains yield on this stock?

a. 28.34%

b. 25.97%

c. 19.20%

d. 17.59%

e. 10.05%

Reference no: EM132000795

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