Page Congratulations! You have just won the Caribbean Lottery valued at 15 million dollars! Under lottery rules, you hav

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Page Congratulations You Have Just Won The Caribbean Lottery Valued At 15 Million Dollars Under Lottery Rules You Hav 1 (63.2 KiB) Viewed 55 times

Page Congratulations! You have just won the Caribbean Lottery valued at 15 million dollars! Under lottery rules, you have been given the option of accepting a one-time lump-sum payment of 54.2 million today or equal annual payments for the next 25 years. What is the annual payment that makes you indifferent to either option? Approximately: A S432,000 4,200.000 PU B. $600,010 C. $304,717 D. None Gimme me money now! 3. Karing Corp.just issued some new preferred stock. The issue will pay a $7 annual dividend forever, beginning ten years from now. If the market requires a 9 percent return on this investment, what is the maximum amount you will pay for this stock? A $77.78 B. $32.86 CS35 81 D. $36.47 4. Handley Inc. currently earns $6.00 per share, and has a payout of 40 percent. Dividends are expected to grow at a constant rate of 9 percent per year. The required rate of return is 19 percent. What maximum price should you be willing to pay for Handley's stock? A $26.16 B. $24.00 C. $13.77 D. $34.06 5. Taphome Inc. is a young start-up company. No dividends will be paid on the stock over the next 11 years because the firm needs to plow back its earnings to fuel growth. The company will pay a 512 dividend in 12 years and will increase the dividend by 5% per year thereafter. If the required return on this stock is 14%, what is the current share price? A 27.67 B 133.33 C 31.55 D. 47.55 6. Ruggedy Bikes is considering a project that has the following cash flows and a WACC of 10%: Year 0 1 2 3 4 Cash Flow $1,000 $485 $445 $405 What is the project's discounted payback? A 1.66 years 81.82 years C203 years D 2.36 years