Practice questions

A five-year project has an initial fixed asset investment of $285,000, an initial NWC 25 investment of $25,000, and an annual OCF of -$24,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required return is 11 percent, what is this project's equivalent annual cost, or EAC? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 8 01:35:34 Equivalent annual cost26 The Jackson-Timberlake Wardrobe Co. just paid a dividend of $165 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely. Investors require a return of 12 percent on the company's stock. a. What is the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 3216.) 8 01:35:27 b. What will the stock price be in 3 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 3216.) c. What will the stock price be in 14 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Current price b. Stock price in 3 years c. Stock price in 14 years