1. Andover Inc., had a current share price of $34, and the firm had 5,000,000 shares of stock outstanding. The company is considering an investment project that requires an immediate $62,000,000 investment but will produce a stream of cash flow of $35,000,000 each year over the next 3 years then close. There is no salvage value. If Andover invests in the project, what would the new share price be? Andover's cost of capital is 12%. (Hint: consider how the project NPV affects the stock price)
a. $42.06
b. $43.80
c. $38.41
d. $37.27
e. $35.63
2. Whited Inc.'s stock currently sells for $35.25 per share. The dividend is projected to increase at a constant rate of 5.25% per year. The required rate of return on the stock, rs, is 11.50%. What is the stock's expected price 5 years from now?
a. $52.81
b. $39.15
c. $45.53
d. $47.80
e. $40.06
Please show either excel formula or calculations