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:**

Based on your answer from question 2, what is that project’s

NPV. Enter you number to the nearest whole number without the

$ sign (example: $532.89 enter as 533).

**Answer:923(correct)**

**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:**

Based on your answer from question 4, select the project that

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.)**