Homework answers / question archive / 1 An equity analyst is estimating PLK Ltd’s share price at the end of four years from today

1 An equity analyst is estimating PLK Ltd’s share price at the end of four years from today

Finance

Share With

1 An equity analyst is estimating PLK Ltd’s share price at the end of four years from today. The company has recently paid a dividend of $1.30 which is expected to grow at 4% p.a. over the foreseeable future. If the company’s required rate of return on equity is 10% the analyst’s price estimate at the end of year 4 will be closest to:

Group of answer choices

$21.70.

$25.35.

$26.40.

$22.50.

2 

A firm is evaluating the acceptability of an investment that costs $90,000 and is expected to generate annual cash flows equal to $20,000 for the next six years. If the firm's required rate of return is 10 percent, what is the net present value (NPV) of the project? Should the project be purchased?