Question 1:

Question 2:

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Management of Sheridan, a biotech firm, forecasted the following growth rates for the next three years: 35 percent, 28 percent, and 22 percent. Management then expects the company to grow at a constant rate of 9 percent forever. The company paid a dividend of $2.20 last week. If the required rate of return is 17 percent, what is the value of this stock? (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.20.) Value of stock $ What is the average accounting rate of return (ARR) on a piece of equipment that will cost $1,416,000 and that will result in pretax cost savings of $448,000 for the first three years and then $330,000 for the following three years? Assume that the machinery will be depreciated to a salvage value of 0 over six years using the straight-line method and the company's tax rate is 32 percent. (Round final answer to 1 decimal place, e.g. 527.5.) Average accounting rate of return % If the acceptance decision is based on the project exceeding an ARR of 20 percent, should this machinery be purchased? The machinery be purchased. should should not