1.

Felix Inc has a prospective project with an IRR of 7.50%. Its cost of preferred equity, cost of common equity, and post-tax cost of debt are 7%, 9%, and 4%, respectively, and Sparta raises equal amounts of funding from all these three sources. Choose the best statement:

		The projects NPV must be negative.
		The projects net present value (NPV) must be $0.
		There is insufficient information to assess either the required rate or the NPV of the project.
		The projects required rate of return must be greater than 7.50%.
		The projects NPV must be positive.

2.

Data for all Dixon Corp. problems are the same. Dixon Corp. just paid out a dividend of $4.50 per share of common stock. Analysts expect the dividend to grow by 17% over the coming three years, and then grow steadily at 5% for the foreseeable future after that. Investors require a return of 8% on this stock. Dixon stock should be selling for _____ today.

		$244.10
		$216.13
		$252.25
		$208.12
		$259.46