financial maNAGEMNET
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Internal Rate of Return
0 = -162000 + 54000/(1+IRR) + 85000/(1+IRR)^2 + 69000/(1+IRR)^3 IRR = 13.06%
growth rate
54.5=3.9/0.5-G
discount rate
=3000((1+r))^# of years the questions asks for
required rate of return
anual preferred dividend/ market price of stock*100
payback period
inital investment/Cash flows
price of stock
price of stock = dividend next year/(required return - growth rate)
price of stock with negative earnings
sales per share = 2,500,000 / 210,000 = $ 11.90 per share Case 1 ) - price per share = price sales ratio * sales per share = 5.7 * 11.90 = $ 67.83 per share case 2 ) price per share = 5.1 * 11.90 = $ 60.69 per share
NPV
year zero= -10000((1+10%))^0 Year one = 3000((1+10%))^1 repeat for every year increasing the exponent by 1
