Assignment Instructions

or the company ExxonMobil answer the following questions. Assume a discount rate for all cash flows of r=2.5% nominal annual. a) The current amount of dividends paid by the company is $0.87/share Based on the dividend amount, calculate the theoretical stock price using the dividend discount model, assuming that the dividend remains con stant forever. (Pay attention to the number of dividend payments per year for your company) (2 points) b) Due to the Coronavirus some companies might not be able to pay the full amount of the dividend in the future. Using the dividend discount model calcu late the stock price under the assumption that for the next 10 years the compa ny will pay NO dividends at all and after that resume paying the same dividend as today for all future periods. (4 points) c) Similarly, using the dividend discount model calculate the stock price under the assumption the dividends will fall by 5% every year from the current level for the next 5 years and then remain constant at that level for all future peri ods. (5 points) d) Explain the difference between the NPV and the IRR method when making in vestment decisions. Which method should be preferred when choosing be tween several projects? And Why? (4 points). or the company ExxonMobil  answer the following questions. Assume a discount rate for all
cash flows of r=2.5% nominal annual.
a) The current amount of dividends paid by the company is $0.87/share
Based on the dividend amount, calculate the theoretical stock price
using the dividend discount model, assuming that the dividend remains con
stant forever. (Pay attention to the number of dividend payments per year for
your company) (2 points)
b) Due to the Coronavirus some companies might not be able to pay the full
amount of the dividend in the future. Using the dividend discount model calcu
late the stock price under the assumption that for the next 10 years the compa
ny will pay NO dividends at all and after that resume paying the same dividend
as today for all future periods. (4 points)
c) Similarly, using the dividend discount model calculate the stock price under
the assumption the dividends will fall by 5% every year from the current level
for the next 5 years and then remain constant at that level for all future peri
ods. (5 points)
d) Explain the difference between the NPV and the IRR method when making in
vestment decisions. Which method should be preferred when choosing be
tween several projects? And Why? (4 points)

or the company ExxonMobil answer the following questions. Assume a discount rate for all cash flows of r=2.5% nominal annual. a) The current amount of dividends paid by the company is $0.87/share Based on the dividend amount, calculate the theoretical stock price using the dividend discount model, assuming that the dividend remains con stant forever. (Pay attention to the number of dividend payments per year for your company) (2 points) b) Due to the Coronavirus some companies might not be able to pay the full amount of the dividend in the future. Using the dividend discount model calcu late the stock price under the assumption that for the next 10 years the compa ny will pay NO dividends at all and after that resume paying the same dividend as today for all future periods. (4 points) c) Similarly, using the dividend discount model calculate the stock price under the assumption the dividends will fall by 5% every year from the current level for the next 5 years and then remain constant at that level for all future peri ods. (5 points) d) Explain the difference between the NPV and the IRR method when making in vestment decisions. Which method should be preferred when choosing be tween several projects? And Why? (4 points)

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