Business finance
posted by zeeshan on .
Question No 1:
Sumi Inc. has policy of paying a Rs. 9 per share dividend every year. If this policy is to continue indefinitely, what will be the value of a share of stock at a 12% required rate of return?
Rs. 30
Rs. 45
Rs. 60
Rs. 75
Question No: 2
The XYZ Corporation is considering an investment that will cost Rs. 80,000 and have a useful life of 4 years. During the first 2 years, the net incremental aftertax cash flows are Rs. 25,000 per year and for the last two years they are Rs. 20,000 per year. What is the payback period for this investment ?
3.2 Years
3.5 Years
4.0 Years
Cannot be determined from the given information
Question No: 3
Which of the following statement is INCORRECT regarding a normal project ?
a)If the IRR of a project is greater than the discount rate, k, then its PI will be greater than 1
b)If the NPV of a project is greater than 0, then its PI will exceed 1
c)If the IRR of a project is 8%, its NPV, using a discount rate, k, greater than 8%, will be less than 0
d)If the PI of a project equals 0, then the project's initial cash outflow equals the PV of its cash flows

Q1. 75
9/0.12=75
Q2 3.5
Q3, If the PI of a project equals 0, then the project's initial cash outflow equals the PV of its cash flows.