For a company having a beta of $1\mathrm{.}1,$ a current stock price of $$40$ per share,

and an expected dividend this coming year of $$2\mathrm{.}80$ per share, what is the

projected stock price one year from today? $($Assume the market risk

premium is $12\%$and the risk$-$free rate is $6$ percent$).$

b$)$ A company is considering an investment that offers a net cash flow of

$$100,000$ per year for the indefinite future. The risk of this project is felt to be

the same as the average for all stocks i$.$e beta$=1.$ If the Treasury bill rate is $8$

percent and the market return is expected to be $14\%,$ what is the maximum

investment outlay that should be made?