QUESTION $18$

MSB Trucking Corporation is planning to purchase a new truck at a cost of $$100,000.$ The increased business from this investment will increase the revenue of the company by $$80,000$ per year for the next six

years. All costs to operate the truck including taxes will be $$55,000$ each year. At the end of the six years, the truck will be sold to a junk yard to net $$5,000$ after taxes. The company's cost of capital is $12$

percent. The level of risk of sales from this truck is the same as the overall risk for the company. What is the NPV of this truck purchase decision? $($Hint: Cash flows are constant in Years $1$ to $5.)$

A$.$ $$149,218$

B$.$ $$128,661$

C$.$ $$108,104$

D$.$ $$87,546$

E$.$ $$66,989$

F$.$ $$46,432$

G$.$ $$25,875$

H$.$ $$5,318$

QUESTION $19$

If $D_1=$$$1\mathrm{.}40,g($which is constant$)=6\%,$ and $P_0=$$$50,$ what is the stock's expected total return for the coming year? Note: $D_1$ is the expected dividend next year.

A$.8\mathrm{.}00\%$

B$.8\mathrm{.}20\%$

C$.8\mathrm{.}40\%$

D$.8\mathrm{.}60\%$

E$.8\mathrm{.}80\%$

F$.9\mathrm{.}00\%$

G$.9\mathrm{.}20\%$

H$.9\mathrm{.}40\%$