question 4

what is for NpV ? use question 3 to find NPV.

Question 1 0.25 pts The current dividend yield of CyTrade's stock is 2.5%. The company just paid a $2.50 annual dividend today and will pay a dividend of $2.75 next year. The dividend growth rate is expected to remain at the current level. What is the required rate of return on the stock? O 13.5% O 12.5% O 11.59% 10% Question 2 0.25 pts Which of the following statements are true about the NPV principle? 1. It tells how much net profit (or net loss) can be generated by the project II. It doesn't use the idea of the time value of money. III. You'll accept the project when its NPV is positive, Only1 O I, II and III I and II O I and II Your firm is considering a project that will cost $10,000 upfront, generate cash flows of $5,000 each year for the next three years. Finally, the project will have a shutdown cost of $1,500 in the fourth year. If the cost of capital is 5%, what is the present value of the future benefits? Hints: the future benefits only include those incoming cash flows, O $15,000 $12,320.48 O $14.285.71 $13,616.24