Question1. Taylor Tools is young start-up company. No dividends will be paid on the stock over the upcoming 7 years because the firm requires plowing back its earnings to fuel growth. The company will then pay a $9 per share dividend in year 8 and will increase the dividend by 4 percent per year thereafter. If the required return on this stock is 12 percent, what is current share price?
Question2. Your firm is contemplating the purchase of new $630,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $70,000 at an end of that time. You will save $260,000 before taxes per year in order processing costs, and you will be capable to reduce working capital by $85,000 (this is one-time reduction). If the tax rate is 30 percent, what is IRR for this project?
Question3. The ABC Company had crime coverage in amount of $5,000 following a covered crime loss of $10,000. The insurance company recovered $8,000. Explain how the recovered amount would be distributed between the parties involved.
Question4. A tax-exempt bond was recently issued at an annual 8 percent coupon rate and matures 20 years from today. The par value of bond is $1,000.