1. You believe the market value of a firm's operating assets is $500 million. It has $30 million excess cash on its balance sheet. The firm's total outstanding debt (bonds) is $125 million. The firm has 3.3 million shares outstanding. What is your estimate for the firm's stock price? Pick the closest answer.

2. An investment has a CAPM beta of zero. Will this investment provide a guaranteed return with no risk? Please answer Yes/No and explain.

3. A firm has book equity of $450 million, debt of $420 million, and excess cash of $120 million. Its current stock price is $77/share, and its market capitalization is 1.33 billion. Its CAPM beta is 1.60. The tax rate is 21%. Yield to maturity on its debt is 5.0%.

If the relevant risk-free rate is 2.0% and expected return on the market is 7%, what rate should we use to discount the free cash flows of this firm's typical projects? Pick the closest answer.