1. What are the following projects operating cash flows for year 1:

Sales: $10,000 All costs excluding depreciation: 20% of sales Annual depreciation expense: $3,000 Tax rate: 21% Purchase price of asset: $2,200 Current assets: $1,000 Current liabilities: $700

1. A $4,200

2. B $6,200

3. C $6,218

4. D $6,318

5. E None of the above

2. Suppose a firm has just paid a dividend of $4 per share. Subsequent dividends will remain at $4 indefinitely. Assuming a 5% required rate, what is the value of one share?

1. A) $22.50

2. B) $27.25

3. C) $32.50

4. D) $37.25

5. E) $80.00