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Equivalent annual cost = Present Value (of first machine)/Annuity Factor (of replacement period)
Ah, I missed the chapter 16 lecture. It’s making more sense after a quick glance at the video, thanks.
1a) I don’t get the question. Surely you would just multiply ordinary share price by number of ordinary shares (3.30 x 5 mil) to get the value of the company
1b) P0 in the growth model is the ex-div market price. Yet we are told the ex-div share price is 3.30. So shouldn’t P0=3.30?
Are you saying P0 is only a theoretical value due to the reasons above?
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