1. Hayden Ltd intends to make its first dividend payment 5 years(s) from now. It then intends to pay dividends annually thereafter. The company has announced it expects the first three dividends to all be of the magnitude of around 5 cents per share. Subsequent dividends will then be paid out at a set rate of 50% of earnings. Your earnings forecasts for this coming year suggest that $0.20 Earnings per Share (EPS) is the most likely outcome. You are then forecasting EPS growth of around 2.1% p.a. in perpetuity. What would beyour valuation of Hayden Ltd's shares, given you require a 15% p.a. return?

State your answer in dollars to THREE decimal places.

2 A firm has undertaken a feasibility study to evaluate a project that has the following estimated cashflows:

Increased sales to business of $160,000 for the next four years (starting in one year's time)

Increased costs of $40,000 for the next two years (starting in one year's time)

The initial capital expenditure required is $400,000.

The feasibility study cost $8,000 to conduct.

Amount borrowed to fund project is $280,000 with interest of 7.5% p.a. paid yearly.

If the firm is facing a discount rate of 10%, what is the NPV of this project?

A29,756.98

B37,756.98

C35,756.98

D4,243.02

3 Tank Ltd is considering undertaking the purchase of a new piece of equipment that is expected to increase revenue by $12,000 each year for six years. The equipment will increase costs $4,000 each year for six years. It costs $32,000 to purchase today and for tax purposes must be depreciated down to zero over its 8 year useful life using the straight-line method. If Tank is actually forecasting a salvage (for capital budgeting purposes) of $5,000 after 6 years, what is the machine's net cash flow (after tax) for year 6? Assume the tax rate is 30%.

1. 12,400
2. 13,000
3. 11,800
4. 12,700