A firm, Old Co., has two projects which it will start next year. At the end of each year, the firm pays dividends equal to 5% of each year's cash-flows generated from projects in years with positive total cash-flows (this is company policy). The company had 1,000 shares outstanding 2 years ago, and 1 year ago it issued an additional 1,000 new shares in a public offering. Project 1's cash-flows are conventional, and grow at 2 percent per year, forever, after the first year of positive cash flows. Project 2's cash-flows are not conventional, with a combined $3 Million expense spread evenly across the first two years, and grow at 4 percent per year, forever, after the first year of positive cash-flows. The market discount rate/required return is 4.5%. See the table below for project cash-flows. Year (from today) Project 1 Project 2 1 -5,000,000 -1,500,000 2 100,000 -1,500,000 3 102,000 100,000 104,040 104,000 5 106,120 108,160 (continued) (continued) After Old Co. pays dividends at the end of Year 3, the firm splits in two, and an entirely new company, New Co. is spun out of Old Co. containing all of Project 2. All existing Old Co. shareholders receive an equal number of shares in New Co., one-for-one, and are the only shareholders in New Co. after the spin-off (though they could sell their shares later if they wanted). The projects are unaffected by Old Co.'s divestiture. 4 Questions (These are three separate questions, 10 points each, which are based on the above information): 1. (10 points) What is the fair value of all of New Co's equity at the time of the divestiture?(Enter in format 123,456,789, round to the nearest dollar): 2. (10 points) What is the fair value of Old Co's stock price per share today? (Enter in format 123,456,789, round to the nearest dollar): 3. (10 points) How much greater would the value of New Co. stock today be if it moved all investments up to today instead of t=1 (ie. Project 1 had a cash outlay of $5,000,000 today instead of in one year from today)