Fine 3010 Quiz 2 | Tulane University
- Tulane University / Fine 3010
- 22 Dec 2021
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- Accounting & Economics Assignment Help / Finance
Fine 3010 Quiz 2 | Tulane University
Question 1
The basic dividend discount model is of the form: Pt = Dt+1 / ( r – g )
You are deciding whether to buy a stock that just paid a $3 dividend. The expected growth rate is 12% per year and the expected rate of return in the market is 18%. What is your expectation of the value of one share of this stock today? (Show your work as best you can in the space below.)
Question 2
Which of the following methods was NOT mentioned in the material for the next lecture as a technique of evaluating new projects?
· Straight-line Approximation
· Net Present Value
· Payback Period
· Profitability Index
· Internal Rate of Return
Question 3
Name two differences between the structure of an Auction Market and a Dealer Market (don't "NYSE" vs. "Nasdaq" as one of your items).
Question 4
Suppose it costs $1 million, today, to invest in a project that will last 3 years and is expected to produce $500,000 per year in after-tax cash flows. If the correct discount rate to evaluate the project is 13%, solve for the NPV. Should you accept the project? Why or why not? (Show inputs/work in Canvas)
USA 
India