# You are forecasting the return

You are forecasting the returns for Crane Company, a
plumbing supply company, which pays a current dividend of \$10.30.
The dividend is expected to grow at a rate
of 3.3 percent. You have identified two public
companies, Ayayai and Pina, which appear to be
comparable to Crane. Ayayai has the same total risk
as Crane and a beta of 1.35. Pina, in contrast,
has a very different total risk but thThe table below shows the un-discounted cash flows of 5 projects
over 4 years. Use this following information to answer questions 2
through 6. For all questions assume that the yearly discount
rate is 9%.

 Project Year 0 Year 1 Year 2 Year 3 Year 4 A -\$1,000 \$300 \$500 \$500 \$600 B -\$1,000 \$150 \$200 \$1,000 \$1,200 C -\$2,000 \$1,900 \$200 \$0 \$0 D -\$200 \$300 \$0 \$0 \$0 E -\$200 \$300 \$0 -\$100 \$0

Question 2:

If the projects are mutually exclusive which project do you
accept?

Project A

Project B(correct)

Project C

Project D

Project E

Question 3:

NPV. Enter you number to the nearest whole number without the
\$ sign (example: \$532.89 enter as 533).

Question 4:

If the projects were not mutually exclusive and you had
unlimited money, which projects would you accept? Select all
valid projects from the list below.

Project A(correct)

Project B(correct)

Project C

Project D(correct)

Project E

Question 5:

has the highest IRR, what is that project’s IRR? Enter you
number to four decimal place without the % (example 13.47% enter as
.1347).

Question 6:

If you are interested in selecting the project with the highest
Profitability Index which project would you select.

Project A

Project B

Project C

Project D

Project E

*Questions for 5&6 rest of the answers are
correct
e same market risk
as Crane. Pina’s beta is 1.15. The market risk
premium is 4.65 percent and the risk-free rate
is 1.15 percent.

Determine the price of Crane. (Round
answer to 2 decimal places, e.g. 125.61.)

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