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Suppose tb pirates, inc., is expected to pay a $2 dividend in 1 year. If the...

Suppose tb pirates, inc., is expected to pay a $2 dividend in 1 year. If the dividend is expected to grow at 5% per year and the required return is 20%, what is the price? Answer = $13.33

1.

If the TB Pirates common stock is trading today at $15, should you buy it

A

Yes

B

No

2. Suppose an investment will cost $90,000 initially and will generate the following cash flows: Year 1: 132,000 Year 2: 100,000 Year 3: -150,000 The required return is 15%. Should we accept or reject the project?

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