1. A firm is considering a new investment whose data are shown below. The equipment would be depreciated on a straight-line basis over the project's 3-year life, would have a zero salvage value, and would require additional net operating working capital that would be recovered at the end of the project's life. Revenues and other operating costs are expected to be constant over the project's life. What is the project's NPV ( no decimal places) (Hint: Cash flows from operations are constant in Years 1 to 3.)

WACC 10%

Net investment in fixed assets (depreciable basis) $75,000

Required net operating working capital at t=0 $15,000

Straight-line depreciation rate 33.333%

Annual sales revenues $75,000

Annual operating costs (excl. depreciation) $25,000

Tax rate 21.0%

2.

If your stock paying annual dividends will pay a dividend D₁ at t=1 of $1 and have a growth rate of 10.3% between t=1 and t=2, and with a constant growth rate of 5.3% thereafter into the future, what should be the value of the stock at t=0 if the expected rate of return for the stock is 8% (to two decimal places) ?