1. What is the NPV of the project with the following cash flows?
Year 0: -$400
Year 1: $200
Year 2: $200
Year 3: $400
The WACC for the project is 10%.
a. $269.6
b. $255.3
c. $266.4
d. $247.63
2. The risk-free rate is 4%; the market risk premium is 8%. KLL Company’s stock has a beta of 1.5. The last dividend was $4 per share. The dividend is expected to grow at 5%. What is the expected price of the stock in four years?
a. 50.55
b. 48.31
c. 46.41
d. 52.32