Circle the term with the prefix that means $above ~or ~on~ top ~of$.

hypogastric $\quad$ endocardium $\quad$epigastric

Billabong Tech uses the internal rate of return (IRR) to select projects. Calculate the IRR for each of the following projects and recommend the best project based on this measure. Project T-Shirt requires an initial investment of $15,000 and generates cash inflows of$8,000 per year for 4 years. Project Board Shorts requires an initial investment of $25,000 and produces cash inflows of$12,000 per year for 5 years.

Derive the definition for the medical term listed below.

otitis media

Sweet Potato Corporation is considering the acquisition of a new cooking machine. The initial investment is estimated at $\$ 2.52$ million, and the machine will have a 5 -year life with no salvage value. Using a $10 \%$ discount rate, determine the net present value (NPV) of the machine given its expected operating cash inflows shown in the following table. Based on the project's NPV, should Sweet Potato Corporation make this investment?

$$\begin{array}{cc} \text { Year } & \text { Cash inflow } \\ \hline 1 & \$ 850,000 \\ 2 & 768,000 \\ 3 & 643,000 \\ 4 & 565,000 \\ 5 & 400,000 \end{array}$$

Deconstruct the following word.

Deconstruct the following word.

Define the term suffix. What is the function of a suffix?

$$\rule{10cm}{0.15mm}$$

How is the net present value (NPV) calculated for a project with a conventional cash flow pattern?

Nick is a security analyst in an investmentbanking firm. His supervisor asked him to evaluate a preferred stock. The par value of the preferred stock is $\$ 100$ and it pays an annual dividend of $\$ 5.30$ per share. Answer the following questions on the basis that the market required return is $7 \%$. a. What is the market value of the preferred stock? b. Suppose an investor purchased the preferred stock today, held it for one year, and sold it upon receiving the dividend. If the market required return is $8 \%$ when he sold the preferred stock, what is the investor's total rate of return?

Sweet Candy will pay a dividend of $\$ 0.72$ next year. The $\mathrm{CEO}$ of the company declared that the company will maintain a constant growth rate of $7 \%$ per year every year from now on. a. How much will you pay for the stock if your required return is $10 \%$ ? b. How much will you pay for the stock if your required return is $8 \%$ ? c. Based on your answer in parts $\mathbf{a}$ and $\mathbf{b}$, give one disadvantage of the constant growth model.

Common stock value: All growth models You are evaluating the potential purchase of a small business currently generating $\$ 42,500$ of after-tax cash flow $\left(D_0=\$ 42,500\right)$. On the basis of a review of similar-risk investment opportunities, you must earn an $18 \%$ rate of return on the proposed purchase. Because you are relatively uncertain about future cash flows, you decide to estimate the firm's value using several possible assumptions about the growth rate of cash flows.

c. What is the firm's value if cash flows are expected to grow at an annual rate of $12 \%$ for the first 2 years, followed by a constant annual rate of $7 \%$ from year 3 to infinity?

Common stock value: All growth models You are evaluating the potential purchase of a small business currently generating $\$ 42,500$ of after-tax cash flow $\left(D_0=\$ 42,500\right)$. On the basis of a review of similar-risk investment opportunities, you must earn an $18 \%$ rate of return on the proposed purchase. Because you are relatively uncertain about future cash flows, you decide to estimate the firm's value using several possible assumptions about the growth rate of cash flows. a. What is the firm's value if cash flows are expected to grow at an annual rate of $0 \%$ from now to infinity?

Common stock value: All growth models You are evaluating the potential purchase of a small business currently generating $\$ 42,500$ of after-tax cash flow $\left(D_0=\$ 42,500\right)$. On the basis of a review of similar-risk investment opportunities, you must earn an $18 \%$ rate of return on the proposed purchase. Because you are relatively uncertain about future cash flows, you decide to estimate the firm's value using several possible assumptions about the growth rate of cash flows.

b. What is the firm's value if cash flows are expected to grow at a constant annual rate of $7 \%$ from now to infinity?

Common stock value-All growth models You are evaluating the potential purchase of a small business currently generating $\$ 42,500$ of after-tax cash flow $\left(D_0=\$ 42,500\right)$. On the basis of a review of similar-risk investment opportunities, you must earn an $18 \%$ rate of return on the proposed purchase. Because you are relatively uncertain about future cash flows, you decide to estimate the firm's value using several possible assumptions about the growth rate of cash flows. Find the firm's value if cash flows are expected to grow at an annual rate of $0 \%$ from now to infinity.