IRR function for this problem is 7. 7% and invest in the project
<h3>What is
IRR function?</h3>
The Excel IRR function returns the internal rate of return (IRR) for a sequence of cash flows that occur at regular intervals. Determine the internal rate of return. Return was calculated as a percentage. =IRR (values, [guess])
IRR is the interest rate at which the sum of all cash flows equals zero, thus it is useful for comparing one investment to another. In the preceding example, if we substitute 8% with 13.92%, the NPV becomes 0, and your IRR becomes zero. As a result, IRR is defined as the discount rate at which a project's NPV becomes zero.
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Answer:
At 10 percent capitalization rate the price of the stock is $104.49
At 7 percent capitalization rate the price of the stock is $156.48
Explanation:
D1 = 5
D2 = 5 x 1.2 = 6
D3 = 5 x 1.2^2= 7.2
D4 = 5 x 1.2^3 = 8.64
D5 = 5 x 1.2^4 = 10.37
D6 = 5 x 1.2^5 = 12.44
At 10 percent capitalization rate the price of the stock can be computed by first calculating the present value of the dividends computed above
5/1.1 = 4.54
6/1.1^2 = 4.96
7.2/1.1^3 = 5.41
8.64/1.1^4 = 5.90
10.37/1.1^5 = 6.44
12.44/1.1^6 = 7.02
Price after six years when the stock will experience zero growth should be
P = 12.44/0.1 = 124.4
The present value of the price six years after should be
124.4 / 1.1^6 = 70.22
Adding up all the p[resent values gives us the price of the stock today
4.54 + 4.96 + 5.41 + 5.90 + 6.44 + 7.02 + 70.22 = $104.49
At 7 percent capitalization rate the price of the stock can be computed by first calculating the present value of the dividends computed above
5/1.07 = 4.67
6/1.07^2 = 5.24
7.2/1.07^3 = 5.88
8.64/1.07^4 = 6.59
10.37/1.07^5 = 7.39
12.44/1.07^6 = 8.29
Price after six years when the stock will experience zero growth should be
P = 12.44/0.07 = 177.71
The present value of the price six years after should be
177.71 / 1.07^6 = 118.42
Adding up all the p[resent values gives us the price of the stock today
4.67 + 5.24 + 5.88 + 6.59 + 7.39 + 8.29 + 118.42 = 156.48
Answer:
The correct answer is letter "A": format wars.
Explanation:
Format wars refer to the competition between storage or electronic devices that have similar uses but are incompatible between them. Under this scenario, the competing companies openly confirm the idea that each of them is not willing to cooperate with the other in an attempt of taking control over the market.
<em>An example of format wars is the use of High Definition (HD) DVDs and Blue-ray discs or Microsoft versus Apple in computer technology.</em>