Firms can increase flexibility by producing all parts of a product in-house.

A perpetuity of $4,500 per year beginning today is said to offer a 13% interest rate. What is its present value?

a. $51,769.91 b. $38,597.69 c. $34,615.38 d. $39,115.38

You are considering purchasing one of two stocks. Stock A is expected to pay a $2.50 dividend, and has historically grown at 6%. Stock B is expected to pay a $3.00 dividend and has historically grown at 4%

Both are the same risk, and you desire to earn a 16% return. Which of the following is true? A) You should buy Stock A, since its estimated price is higher than Stock B. B) You should buy Stock B, since its estimated price is higher than Stock A. C) You should buy Stock A, since its estimated price is lower than Stock B. D) You should buy Stock B, since its estimated price is lower than Stock A. E) You should buy either Stock A or B, since the estimated prices are the same.