ABC had a stock price of $25 at the end of 2014 and paid $1 dividend at the end of 2015 with a

forecasted dividend growth of 5%. What is cost of equity for ABC in 2014?

5. You are considering to expand your company's hospitality business in South America and to enter

Argentina. Advisers have suggested a 15% required rate of return based on their evaluation of

similar projects. You estimate an annual end of year cash flow of $1.5M for the first 3 years that

your business is being established. From the fourth year onward, you expect to receive a cash

flow of $4.0M that grows 4% each year (i.e. CF fifth year is $4.2M). What is the NPV for the

project if it requires an investment of $25M today?

Answer rating: 100% (QA)

Ill answer both questions Question 1 Cost of Equity for ABC Given the stock price of 25 at the end o... View the full answer