Question1: The common stock of Eddie's Engines, Inc. sells for $25.71 a share. The stock is expected to pay $1.80 per share next month when the year dividend is distributed. Eddie's has established a pattern of increasing its dividends by 4% yearly & expects to continue doing so. Calculate the market rate of return on this stock?
[A] 11%
[B] 13%
[C] 15%
[D] 7%
[E] 9%
Question2: The internal rate of return (IRR):
Rule states that a typical investment project with an IRR that is not more than the required rate should be accepted.
Is the value generated solely by the cash flows of an investment?
Is the rate that causes the net present value of a project to exactly equal zero?
Can effectively be used to analyze all investment scenarios.
[A] I, II, and III only
[B] II, III, and IV only
[C] I, II, III, and IV
[D] I and IV only
[E] II and III only