3 finance questions are outlined in attached document. Need Excel formulas included in answers to understand work.

Question 1: Break Even Problem Show your work in Excel A firm initiates a 4-year project with an investment of $50,000. Assume that this initial investment is depreciated using the straight-line method. There is no salvage value at the end of the project. Under this project a certain product is produced and sold. Key financial information is provided below: Price/unit Direct Expenses/unit SGA (excl. Depreciation) Taxes 10 2 7,500 30% a. What is the NI break-even? b. What is the NPV break-even? Assume that r = 9%. c. Is the NI BE conservative or aggressive compared to the NPV BE? Why? (1-2 sentences) 1 Question 2: Real Options Show your work in Excel A preliminary analysis of a project indicates the following: Scenario Year CF mil. Initial H L HH HL LH LL 0 1 1 2 2 2 2 -50 25 10 85 70 45 20 NPV of Project Unconditional Probability 100% 70% 30% 49% 21% 12% 18% PVF CF*Prob.*PVF 1 0.90909 0.90909 0.82645 0.82645 0.82645 0.82645 NPV -50.000 15.909 2.727 34.421 12.149 4.463 2.975 22.645 A financial analyst uncovers additional information not incorporated in the calculations above: In year 1, if scenario equals L, the firm can abandon operations and realize a liquidation value of $30 million from its assets. Using the DTA approach, answer the following two questions: a. What is the NPV of the project? b. What is the NPV of the option to abandon? 2 Question 3: Stock Risk & Valuation Show your work in Excel You are provided the following information of a firm's stocks and bonds along with other pertinent information. The stocks have a standard deviation of 50% and a correlation of 0.6 with the market index. The risk-free rate is 2%, and the market risk premium is 7%. The standard deviation of the market is 25%. The firm just paid dividends of $2.50 per share. Assume that the firm pays dividends annually and that the firm adjusts its dividends to maintain a constant dividend payout ratio of 75%. The ROE of the firm is 15%. a. What is the beta of the stock? b. What is the cost of equity? [Hint: Use the CAPM] c. What is the rate of growth in dividends? d. What is the stock price? [Note: the answer from part (a) would be your discount rate] e. How useful (or limited) is this method in valuing stocks? [1-2 sentences] 3