I’m working on a business multi-part question and need a sample draft to help me understand better.
i want solution in form of a table and the solution is typical and the font is size 12
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Q1: Alaman Corp. just paid a dividend of $2.15 yesterday. The company is expected to grow
at a steady rate of 5 percent for the foreseeable future. If investors in stocks of companies like
Alaman require a rate of return of 15 percent, what should be the market price of Alaman’s
stock ? (1 mark)
Q2: Carrefour is expecting its new center to generate the following cash flows:
$6,000,00 $8,000,00 $16,000,00 $20,000,00 $30,000,00
a. What is the payback period for this new center. (1 mark)
b. Calculate the net present value using a cost of capital of 15 percent. Should the project be
accepted? (1 mark)
Q3: Alfa corp has a capital structure which is based on 50% common stock, 20% preferred
stock and 30% debt. The cost of common stock is 14%, the cost of preferred stock is 8% and
the pre-tax cost of debt is 10%. The firm’s tax rate is 40%. (2 marks)
a. Calculate the WACC of the firm.
b. The firm is considering a project that is equally as risky as the firm’s current
operations. This project has initial costs of $280,000 and annual cash inflows of
$66,000, $320,000, and $133,000 over the next three years, respectively. What is
the net present value of this project?
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