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Estimate the present and future values of the following income streams. The annual interest rate is 12% compounded monthly.
The A Venture Capital is expected to grow at annual rate of 18% for the next four years, then at 12% for another three years, and finally settle down to a growth rate of 6% for the indefinite future. Its common stock currently pays a $0.60 dividend, but dividends are expected to increased in proportion ot the growth of the HVC. Given the AVC's cost of capital 12%, (a) estimate the current market value of AVC's common stock; and (b) what would be the price per share at the end of 5 years?
Estimate (i) stock price per share as of today; (ii) beta; (iii) required rate of return; and (iv) internal rate of return. Additionally, please draw the security market line to show the under- or over-priced situation of XYZ's common stock.
The dividend is expected to grow at an annual rate of 15% for the next 10 years, then grow indefinitely at a slower growth rate of 12% per year. (i) Estimate the market price of common stock as of today; and (ii) what would be the price per share if you sell common stock at the end of 5 years.
i. Rank the three projects based on the risk-adjusted IRR method
ii. Rank the three projects based on the risk-adjusted NPV method
iii. Which project would you prefer?