Spartan Enterprises has a project for which they forecast the following income statement and balance sheet items using the percent of sales method.

Item	1	2
Sales	$200,000	$220,000
Costs (40% of sales)	$80,000	$88,000
Depreciation (25% of Prior Net Long Term Assets)	$50,000	$55,000
Interest (5% of Prior Debt)	$4,000	$4,400
Unlevered Net Income (Computed Directly)	$70,000	$77,000
Free Cash Flow (Computed Directly)	$44,000	$48,400
Net Capital Assets (110% of Sales)	$220,000	$242,000
Working Capital (33% of Sales)	$66,000	$72,600
Debt (40% of Assets)	$88,000	$96,800
Marginal tax rate	35%	35%

The project continues past year 2. Use this information to answer the following two questions about the project. (The numbers for these question can be downloaded here Download here.)

Flag question: Question 14

Question 142 pts

What is the cash flow resulting from the change in working capital expected to be in year 2 of the project?

Group of answer choices

$6,600

-$6,600

$72,600

-$72,600

Flag question: Question 15

Question 152 pts

Spartan issues stock to pay for 60% of the project. Investors anticipate a dividend of $10 next year, growing at 4% per year. If investors are willing to pay $90 a share for the stock, what is the actual cost of equity for Spartan?

Group of answer choices

10.2667%

15.1111%

11.06667%

11.1111%