1. After the last year of your project’s time frame, which is Year 6, you believe cash flows will grow at about 5.0% per year forever. An initial estimate of Year 6 net incremental cash flow is $2 million. If WACC is 12.0%, what is the terminal value that should be added to Year 6 cash flows?
a) $28.6 million
b) $14.0 million
c) $30.0 million
2. Say that your firm's depreciable capital investment is $2 million. If you use the 7-year MACRS schedule for determining depreciation expense, how much will depreciation be for year 3?
a) $349,800.00
b) $285,714.28
c) $249,800.00