4.) An investment has an installed cost of $568,382. The cash flows over the four-year life of the investment are projected to be $197,584, $241,318, $189,674, and $157,313. ( SHOW WORK )

a) If the discount rate is zero, what is the NPV?

b) If the discount rate is infinite, what is the NPV?

c) At what discount rate is the NPV just equal to zero?

5.) Stock in CDB Industries has a beta of .95. The market risk premium is 7 percent, and T-bills are currently yielding 4 percent. CDBs most recent dividend was $2.40 per share, and dividends are expected to grow at an annual rate of 5 percent indefinitely. The stock sells for $46 per share. ( SHOW WORK )

a) Using the CAPM, what is your estimate of the company's cost of equity?

b) Using the dividend discount model, what is your estimate of the company's cost of

equity?

c) What is your best estimate of the company's cost of equity?