financial maNAGEMNET

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