8. XYZ Limited pays a constant dividend of $0.60 a share. The company announced today that it will continue to pay the dividend for another 2 years after which time all
dividends will cease. What is one share of this stock worth today if the required rate of
return is 16.5 percent?
9. DEFG Limited is preparing to pay its first dividend. It is going to pay $0.45, $0.60, and $1
a share over the next three years, respectively. After that, the company has stated that
the annual dividend will be $1.25 per share indefinitely. What is this stock worth to you
per share if you demand a 10.8 percent rate of return on stocks of this type?
10. investment project has an installed cost of $518,297. The cash flows over the 4-year life
of the investment are projected to be $287,636, $203,496, $103,802, and $92,556,
respectively. What is the NPV of this project if the discount rate is 0%?
11. An investment project provides cash flows of $100,190 per year for 10 years. If the initial
cost is $800,000, what is the payback period?
12. A firm evaluates all of its projects by using the NPV decision rule. At a required return of
14%, what is the NPV for the following project and should the firm accept the project?
Year. CashFlow
0 -$31,000
1 22,000
2 15,000
3 11,000