1. Describe the importance of the Enterprise Valuation measure? Do you think it is useful? Why or why not?
2. Red Sun Rising just paid a dividend of $2.64 per share. The company said that it will increase the dividend by 30 percent and 25 over the next two years, respectively. After that, the company is expected to increase its annual dividend at 3.4 percent. If the required return is 12.2 percent, what is the stock price today?
3. A general contractor is interested in buying new construction equipment for grading with a purchase price of $139,000 without a salvage price. The annual gain is $31,000 with an arithmetic increase of $2,000 starting the 2nd year. Determine the most economical equipment life to minimize the EUAC.