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Author Question: The common stock of Cranberry Inc is selling for 26.75 on the open market. Next year's dividend is ... (Read 61 times)

Deast7027

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  • Posts: 538
on: Jul 10, 2018
The common stock of Cranberry Inc is selling for 26.75 on the open market. Next year's dividend is expected
  to be 3.68, and the growth rate of this company is estimated to be 5.5.
 
  If Richard Dean, an average investor, is
  considering purchasing this stock at the market price, what is his expected rate of return?

Question 2

Consider a project with the following information:
  Year
  After-tax
  Accounting
  Profits from
  After-tax
  Cash Flow
  Operations
  1 799 750
  2 150 1,000
  3 200 1,200
  Initial outlay = 1,500
  Compute the profitability index if the company's discount
 
  rate is 10.
  A) 1.61 B) 1.81 C) 0.62 D) 15.8


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ecabral0

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Reply #1 on: Jul 10, 2018
Answer to Question 1

R = (D/V) + g
R = (3.68/26.

Answer to Question 2

A


Deast7027

  • Member
  • Posts: 538
Reply 2 on: Jul 10, 2018
YES! Correct, THANKS for helping me on my review

sultansheikh

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  • Posts: 335
Reply 3 on: Yesterday
Great answer, keep it coming :)

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