5 pts Question 6 Amber Company is considering a oneyear proj

5 pts Question 6 Amber Company is considering a one-year project that requires an initial investment of $500,000. However, to raise this capital, the company will incur flotation costs that are 2% of the initial investment amount. At the end of the year, the project is expected to produce a cash inflow of $556.000 What is the rate of return that the company expects to earn on this project after taking flotation costs into consideration? Your answer should be between 7.32 and 16.60, rounded to 2 decimal places with no special characters D | Question 7 5 pts Weaver Brothers expects to earn $3.50 per share (E,), and has an expected dividend payout ratio of 60%, its expected constant dividend growth rate is 6.2%, and its common stock currently sells for $30 per share. New stock can o0 FS 97 F8

Solution

(6) Initial Investment = $ 500000

Flotation Cost = 2 % of Initial Investment = 0.02 x 500000 = $ 10000

Total Initial Outlay = $ 510000

Cash Inflow = $ 556000

Total Return = (556000 - 510000) / 510000 = 0.09019 or 9.02 % approximately.