1. The length of time required for an investment to generate cash flows sufficient to recover the initial cost of the investment is called the:
A. discounted cash period.
B. internal rate of return.
C. net present value.
D. payback period.
E. profitability index.
2. Llano’s stock is currently selling for $50.00. The expected dividend one year from now is $1.50, and the dividend growth rate is constant at 7%. Assuming the constant dividend growth model is appropriate, what is investor's required rate of return? what is dividend yield? what is the capital gains yield?
a) Can't decide based on the information b) 10%,7%,7% c) 10%, 3%, 7% d) 7%, 7%,7%