Question1: A stock that currently trades for 40 dollar per share is expected to pay a yearend dividend of 2 dollar per share. The dividend is expected to grow at a constant rate over time. The stock has a beta of 1.2, the risk-free rate is 5%, and the market risk premium is 5 percent. Calculate the stocks expected price 7 years from today?
Question2: The capital budgeting director of Sparrow Corporation is evaluating a project that costs 200,000 dollar, is expected to last for ten years and produces after-tax cash flows, including depreciation, of $44,503 per year. If the firm's WACC is 14 percent & its tax rate is 40 percent, calculate the project's IRR?