A stock sells for . The next dividend will be per share. If the rate of return earned on reinvested funds is 15 percent and the company reinvests 40 percent of earnings in the firm, what must be the discount rate?
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A business is considering a 0,000 project. The current annual rate of inflation is 4%. One option is to take out a loan for 8.5% for the investment. The current production rate of return is 9.5%. If the company was to invest the 0,000 instead of carrying out the project, the expected rate of return would be 9.25%. What should the discount rate be for evaluating this project option?