What is the IRR of an investment that costs $500,000 and has OCFs of $175,000 a year for 2 years and $87,000 for the next three years? Pane in the Glass Autobody Ltd

Finance Dec 12, 2020

What is the IRR of an investment that costs $500,000 and has OCFs of $175,000 a year for 2 years and $87,000 for the next three years?

Pane in the Glass Autobody Ltd. (PITGAL) just paid a quarterly dividend of $1.60 per share. PITGAL's dividends grow at a quarterly rate of 1.5%. The company has announced that following the quarterly dividend in one year's time, dividends will grow at a quarterly rate of 2%. Given the risk associated with PITGAL's stock, the required quarterly expected effective return is 3.78%. What is the current price of one share of PITGAL stock?

Expert Solution

IRR of investment = 8.38%

Current price of one share of PITGAL stock = $89.95 Or $90

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