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Scott
,
MIT Graduate
Category:
Finance
Satisfied Customers:
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Experience:
I manage my own money  stocks, bonds, 401k, etc.
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What is the NPV of a project that costs $100,000 and ...
Resolved Question:
What is the NPV of a project that costs $100,000 and returns $50,000 annually for three years if the opportunity cost of capital is 14%
Submitted:
9 years ago.
Category:
Finance
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Expert:
Scott
replied 9 years ago.
Hi there,
Don't forget the other answer I gave you at the bottom of this thread:
http://finance.justanswer.com/questions/172s5pretaxcostdebtfirm35tax
Now this one...
Remember that:
PV = FV/(1+r)^t
Add up the costs and the PV of the returns:
100000 + 50000/(1+0.14)^1 + 50000/(1+0.14)^2 + 50000/(1+0.14)^3
= 16081.60
Let me know if you have any questions,
Scott
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Customer:
replied 9 years ago.
how do I give my quetion directly to you? I like working with you on these.
Expert:
Scott
replied 9 years ago.
Hi there,
Glad to hear it :)
You can post your question here in a reply to me. If I can answer it, I will. If not, I'll ask you to make a new thread so that anyone can answer!
Scott
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Customer:
replied 9 years ago.
What would you estimate to be the required
rate of return
for equity investors if a stock sells for $40 and will pay a $4.40 dividend that is expected to grow at a constant rate of 5%?
Expert:
Scott
replied 9 years ago.
Hi there,
I'm assuming that the 4.40 is the next dividend.
The formula for this is:
Value = Next Dividend / (Required Return  Dividend Growth)
Plug in what we know:
40 = 4.4 / (r  0.05)
Multiply:
40(r0.05) = 4.4
Divide by 40:
r0.05 = 0.11
Add 0.05:
r = 0.16
r = 16%
Let me know if you have any questions,
Scott
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