[Doesnotmatter]

QPT paid a $3 per share dividend yesterday. The dividend is expected to grow at 7% per year for the foreseeable future. QPT has a beta of 1.6, a standard deviation of returns of 28%, and a required return of 19%. What is the value of a share of QPT common stock?

A financial analist expects L. Corp. to pay a dividend of $2 per share in year one, a dividend of $2.50 per share in year two, and estimates the value of the stock at the end of year two to be $30. If your required return on L. stock is 10%, what is the most you would be willing to pay for the stock today?

You are considering the purchase of Z. Company stock. You anticipate that the company will pay dividends of $3.50 per share next year and $4.00 per share the following year. You believe that you can sell the stock for $20.00 per share two years from now. If your required rate of return is 10%, what is the maximum price that you would pay for a share of Z. Company stock?

Your company is considering the replacement of an old machine with a new one that is more efficient. The old machine cost $50,000 when it was purchased 9 years ago. The old machine is being depreciated using a simplified straight-line method over a useful life of 10 years. The old machine could be sold today for $4,000. The new machine has an invoice price of $75,000, and it will cost $5,000 for shipping and $20,000 to modify and install machine. Cost savings from use of new machine are expected to be $25,000 per year for 5 years, at which time the machine will be worn out and sold for its estimated scrap value of $5,000. The new machine will be depreciated using the simplified straight-line method over its 5 years useful life, resulting in depreciation expense of $20,000 per year. The company's tax rate is 35%. Working capital is expected to increase be $10,000 at the inception of the project, but this amount will be recaptured at the end of year 5. What is the incremental free cash flow for year 1?

[Fr_Chuck]

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