MuffinsAndMore has just paid $2.56 in dividends this year. Its dividend is expected to grow by 5% annually for the next four years and by 4% after that. If the market interest rate is 7%, how much should the firm stock be worth today?

$63.1 $85.8 $82.5 $87.8

Cromwell Industries is considering a new project with the following cash flows. After year 3, it assumes free cash flows will perpetually grow by 5% per year. If the interest rate is 10%, calculate the NPV of opening new stores

Year 0 Year 1 Year 2 Year 3 Net income -5,000,000 1,225,000 1,225,000 1,225,000 Depreciation 0 575,000 575,000 575,000 Capital expenditures 20,000,000 0 0 0 Change in net working capital 1,500,000 95,000 95,000 95,000 FCF ? ? ? ?

$4.6 million $3.1 million $7.6 million $6.4 million