QI. ABC Corporation approached you to advise them on a number of projects that they are considering undertaking. 1. The

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Qi Abc Corporation Approached You To Advise Them On A Number Of Projects That They Are Considering Undertaking 1 The 1 (64.65 KiB) Viewed 46 times

QI. ABC Corporation approached you to advise them on a number of projects that they are considering undertaking. 1. The initial outlay or cost of project A is $1,200,000 for a four-year project. The respective future cash inflows for years 1, 2, 3 and 4 are: $500,000, $500,000, $500,000 and $500,000. Calculate the payback period.(Imarks) 2.The initial outlay or cost of Project B is $1,400,000 for a four-year project. The respective future cash inflows for years 1, 2, 3 and 4 are: $400,000, $500,000, $600,000 and $600,000. Calculate the NPV if the cost of capital is 12%?(2 marks) Calculate the NPV of the project.(A) Calculate the Profitability Index (B) Do you accept the project based on the NPV (Yes or No), Explain [C] Q2. 4. XYZ Corporation just paid an annual dividend of AED 5 per share on its common stock. The dividend is expected to grow at a rate of 5 percent for the foreseeable future. If the required rate of return is 10 percent. Compute the current value of the stock (1 marks). 5. Ali wants to invest in a stock that pays $4.0 annual cash dividends for the next four years. At the end of the fourth years, you will sell the stock for $50. If you want to earn 15% on this investment, what is a fair price for this stock if you buy it today?(1) Q3 Using the following information, find the bond value (Price) in each case 1 mark) Coupon Par Value Pric Rate Years to Maturity Yield to Maturity AED10,0 00 5% 20 8% IAI AED5,00 0 10% 30 10% B