Turning Point Company is looking to Value it's share price under 2 circumstances.   Under the "normal" circumstance,       investors have a required rate of return of 14%, the company paid a divdend just now of $2.75 and is expected to have normal growth of 11% per year.      
     
Under the Rapid Growth circumstance, the company will grow at 20% for 4 years, then move        
to a normal growth of 10% per year into perpetuity. (hint use FAME addin or use execel to lay out cash flows). Rate of return remains at 14%      
     
What is the value of the stock of Turning Point under both circumstances?      
 

2. 

BOAML Corp is trying to decide between two mutually exclusive projects.  The cash flows
for Project I and Project II are listed below:
Year	Project I	Project II
0	-$40,000	-$15,000
1	$21,000	$8,500
2	$21,000	$7,500
3	$19,000	$6,500
If the required rate of return is 10% and any reinvestment of cash flows would also be at this rate,
calculate the following for each project:
		Project I	Project II
Payback
Discounted Payback
Net Present Value (NPV)
Internal Rate of Return (IRR)
Profitability Index (PI)
MIRR (assuming reinvestment rate of 5%)
Which project would YOU choose?

Answer rating: 100% (QA)

1 Under the normal circumstance the value of the stock can be calculated using the Gordon growth mod... View the full answer