me stock is trading at $22.00 would it be a good buy?
2
mat is the assumption of the constant growth model as it relates to the dividend?
Question 3-20pts
Consider the following two mutual exclusive projects
Year
Cash flow A
Cash flow B
0
-650,000
-650,000
1
370,000
235,000
2
280,000
190,000
3
195,000
500,000
4
250,000
225,000
The interest rate is 7%
a) If you apply the payback criteria, which project will you choose? Why?
b) If you apply the NPV payback criteria, which project will you choose? Why?
c) If you apply the IRR payback criteria, which project will you choose? Why?
d) If you apply the Profitability payback criteria, which project will you choose? Why
Based on your answers in (a) through (e) which project will you finally choose? Why
If the company had enough capital, could they choose both projects? If so, why?
Question 4-20pts
JB Hanover and Company has 4% coupon bonds that will mature in 17 years. The Bonds are currently selling f
$620. The company uses the weighted average cost of capital to evaluate the feasibility of all b