Homework answers / question archive / 1) Why is it assumed that dividends could grow in the future? Question 5 (5 marks) What are the major sources of funds for large corporations? Question 6 (5 marks) Why does a lower cost of capital serve as an incentive to invest more? Question 7 (5 marks) What is the decision rule of the IRR method? Question 8 (5 marks) What are the limitations of the payback period? 2)What is the present value of the following series of cash payments: $8,000 per year for four consecutive years starting one year from today, followed by annual cash payments that increase by 2% per year in perpetuity (i

1) Why is it assumed that dividends could grow in the future? Question 5 (5 marks) What are the major sources of funds for large corporations? Question 6 (5 marks) Why does a lower cost of capital serve as an incentive to invest more? Question 7 (5 marks) What is the decision rule of the IRR method? Question 8 (5 marks) What are the limitations of the payback period? 2)What is the present value of the following series of cash payments: $8,000 per year for four consecutive years starting one year from today, followed by annual cash payments that increase by 2% per year in perpetuity (i

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1) Why is it assumed that dividends could grow in the future? Question 5 (5 marks) What are the major sources of funds for large corporations? Question 6 (5 marks) Why does a lower cost of capital serve as an incentive to invest more? Question 7 (5 marks) What is the decision rule of the IRR method? Question 8 (5 marks) What are the limitations of the payback period?

2)What is the present value of the following series of cash payments: $8,000 per year for four consecutive years starting one year from today, followed by annual cash payments that increase by 2% per year in perpetuity (i.e. cash payment in year 5 is $8,000*1.02, cash payment in year 6 is $8,000*1.022, etc.)? Assume the appropriate discount rate is 5%/year.