Q: Choose the correct answers

1) Cost of a project of Shell Oil Company could be an up-front amount of $X. The project will generate a positive cash flow of $75,000 a year. Assume that these cash flows are paid at the end of each year and that the project will last for 20 years. The project has a 10 percent cost of capital and a 12 percent internal rate of return (IRR). What is the project's net present value (NPV)?

a) $1,250,000

b) $ 638,517

c) $ 560,208

d) $ 78,309

2) Aki corporation has two stocks. Bothe stocks have different with each other. Stocks A and B have the same required rate of return and the same expected year-end dividend (D1). Stock A's dividend is expected to grow at a constant rate of 10 percent per year, while Stock B's dividend is expected to grow at a constant rate of 5 percent per year. Which of the following statements is most correct?

a) The two stocks should sell at the same price.

b) Stock A has a higher dividend yield than Stock B.

c) Currently Stock B has a higher price, but over time Stock A will eventually have a higher price.

d) None of the statements above is correct.