Dangerfield Industrial Corporation is investing $600 million in its manufacturing unit. Dangerfield has 200 million share of
Question:
Dangerfield Industrial Corporation is investing $600 million in its manufacturing unit. Dangerfield has 200 million share of common stock outstanding with a current market price of $32 per share. The present value of future after tax flows is estimated to be $850 million and is an independent project. Find out the effect of this new project information on the value of firm and share price?
b) David is currently working in an investment firm and has a plan to retire in 35 years from now. He has a plan of investment based on his future expected savings given below,
Year 1-8: He will invest $4,500 per annum,
Year 9-18: He will invest $7,000 per annum,
Year 19-35: He will invest $15000 per year.
If the effective annual rate of return on this investment is 9.8%, find the amount of investment David will receive at the time of his retirement?
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk