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Maserati Mopeds manufactures the world's finest mopeds. Maserati did not pay a dividend this year and does not intend to pay dividends in years 1

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Maserati Mopeds manufactures the world's finest mopeds. Maserati did not pay a dividend this year and does not intend to pay dividends in years 1 or 2. In year 3, the dividend is expected to be $2 per share and to grow at 8%! forever after. Maserati's capital structure is 50% debt and 50% equity. The B of Maserati's assets is 1.0, the required return on its debt is 4%, the risk-free rate is 4%, and the market risk premium is 8% Because Maserati Mopeds is located in Italy, assume that they pay no taxes. (a) What is the required return on Maserati's common stock? What is Maserati's stock price in year 0? (b) The CEO of Maserati has decided to build a second moped factory in Italy. The plant will cost $50 million dollars today and be straight-line depreciated to its market value of $0 in 10 years. You expect the incre- mental cash flows to be $2 million in year 1 and $8 million in years 2 through 10. What is the NPV of this project

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