A firm with a 10 percent cost of capital is considering a pr…

A firm with a 10 percent cost of capital is considering a project for this year’s capital budget.  The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$12,000 $5,400 $5,600 $4,100 $5,000 Calculate the project’s discounted payback period.

Steve plans to retire in 20 years.  He currently has saved u…

Steve plans to retire in 20 years.  He currently has saved up $150,000, and he believes he will need $1,000,000 at retirement.  What annual interest rate must Steve earn to reach his goal, assuming he does not save any additional funds between now and retirement?

Li & Sons’ common stock currently trades at $55 a share.  It…

Li & Sons’ common stock currently trades at $55 a share.  It is expected to pay an annual dividend of $1.93 a share at the end of the year (D1 = $1.93), and the constant growth rate is 10.2 percent a year.  What is the company’s cost of common equity if all of its equity comes from retained earnings?