Question 3 (1 point) The Kayak 'n Roll expects to earn $75,000 a year in perpetuity and to pay out all its earnings as dividends. Suppose that the firm will adopt a new investment policy where 40% of its earnings will be invested in new projects every year starting in year 1. The remaining 60% of earnings will be distributed as dividends. The new projects will earn 20% a year, and the discount rate is 15%. Assuming a tax rate of 35%, what will be the value of the firm under the new investment policy? $195,000 $325,000 $417,857 $500,000 $642,857 Question 4 (1 point) Saved Question 6 (1 point) Cay Paints Co. is considering a 2-year project with an initial purchase of $200,000 in net fixed assets. The project will require $25,000 at t=0 as operating working capital, which will be fully recovered by the firm when the project ends. The project will have revenues of $180,000 and cost of goods sold of $50,000 throughout the project's life. The depreciation schedule is 50% annually. If the tax rate is 30% and the WACC is 10%, what is the NPV of this project? Assume no salvage value. 0-$167,893 0-$152,273 $32,107 O $36,446 None of the above