(9-10)The earning dividends, and stock price of Shelby Inc. are expected to grow at 7% per year in the future. Shelbys common stock sells for $23 per share, its last dividend was $2.00 and the company will pay a dividend of $2.14 at the end of the current year.A Using the discounted cash flow approach, what is its cost of equity?B If the firms beta 1.6, the risk-free rate 9%, and the expected return on the market is 13%, then what would be the firms cost of equity based on the CAPM approach? C If the firms bonds a return of 12%, then what would be your estimate of r, using the over-own-bond-yield-plus-judgmental-risk-premium approach? (Hint: Use the midpoint of the risk premium range.)D On the basis of the results of the parts a through c, what would your estimate of Shelbys cost of equity? (10-1)A project has an initial cost of 52,125, expected net cash inflows of 12, 000 per year for 8 years and a cost of capital of 12%%. What is the projects NPV? (Hint begin by constructing a time line.)(10-2)Refer to Problem 10-1. What is the projects IRR?(10-3) Refer to Problem 10-1. What is the project MIRR?(10-4)Refer to Problem 10-1. What is the project PI?(10-5)Refer to Problem 10-1. What is the projects paycheck period?(10-6)Refer to Problem 10-1. What is the projects discounted paycheck period?(10-7)Your division is considering two investment projects, each of which requires an up-front expenditure of 15 million. You estimate that the investments will produce the following net cash flows. Year Project A Project B 1 $5,000,000 $20,000.0002 10,000,000 10,000.0003 20,000.000 6,000,000A What are the two projects net present values, assuming the cost of capital is %5?B What are the two projects? IRRs at these same costs of capital?
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