1. A stock last paid $2.50 per share in dividend (D₀) which is expected to grow at a constant rate of 5%. If the cost of equity is 9%, what is the stocks fair market value?
2. TRUE OR FALSE?
3. 1. If market interest rate falls to zero, then bonds can be issued at zero coupon rates and their market values would be zero.
   2. Interest rate risk for bonds decreases as bond maturity decreases and as the frequency of bond interest payments rises.
   3. The fair market value of a stock rises with the expected dividend growth rate.
   4. Companies interested in maximizing shareholder value should choose capital projects with a Net Present Value of at least zero.
   5. Discounting a cash flow stream using the IRR could result in a positive or negative NPV project.