1. An all equity firm (i.e. no debt) it expected to produce cash flow in the amount of $110,000 in its first year of operation. Cash flow is expected to grow at 1% for the forseeable future. If the firm's investors require 15% return, what is the Market Value of the Firm?
2. Refer back to question 4. If another firm offers to buy the firm detailed in #4 for $650,000, and all other information stays the same, what is the required rate of return of the firm making the offer (to the nearest whole percent)?
A. 15%
B. 17%
C. 18%
D. Cannot calculate with given info