Question

Please answer them correctly. Here are short 3 problems. Please solve all 3 problems. I would really appreciate your effort. Thanks.

1). Crane, Inc., is a fast-growing technology company. Management projects rapid growth of 30 percent for the next two years, then a growth rate of 17 percent for the following two years. After that, a constant-growth rate of 8 percent is expected. The firm expects to pay its first dividend of $2.56 a year from now. If dividends will grow at the same rate as the firm and the required rate of return on stocks with similar risk is 18 percent, what is the current value of the stock? (Round all intermediate calculations and final answer to 2 decimal places, e.g. 15.20.)

Current Value ______?

2). Sandhill Corp. will pay dividends of $5.00, $6.25, $4.75, and $3.00 in the next four years. Thereafter, management expects the dividend growth rate to be constant at 5 percent. If the required rate of return is 14.00 percent, what is the current value of the stock? (Round all intermediate calculations and final answer to 2 decimal places, e.g. 15.20.)

Current Value ______?

3). Cullumber Corp. management is planning to spend $650,000 on a new marketing campaign. They believe that this action will result in additional cash flows of $304,000 each year for three years. If the discount rate is 17.5 percent, what is the NPV on this project? (Enter negative amounts using negative sign e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.)

The NPV is ______?

Answer 1

1 Value= 34.66

Discount rate	18.0000%
Cash flows	Year	Discounted CF= cash flows/(1+rate)^year	Cumulative cash flow
-	0	-	-
2.560	1	2.17	2.17
3.328	2	2.39	4.560
3.894	3	2.37	6.929
4.556	4	2.35	9.279
49.202	4	25.38	34.66

2. Value = 34.90

Discount rate	14.0000%
Cash flows	Year	Discounted CF= cash flows/(1+rate)^year	Cumulative cash flow
-	0	-	-
5.000	1	4.39	4.39
6.250	2	4.81	9.195
4.750	3	3.21	12.401
3.000	4	1.78	14.177
35.000	4	20.72	34.90

3. . NPV = 16,309.39

Discount rate	17.5000%
Cash flows	Year	Discounted CF= cash flows/(1+rate)^year	Cumulative cash flow
(650,000.000)	0	(650,000.00)	(650,000.00)
304,000.000	1	258,723.40	(391,276.60)
304,000.000	2	220,190.13	(171,086.464)
304,000.000	3	187,395.86	16,309.392