1. In each of the next twelve years, a project will produce annual revenues of $80,000, cash operating expenses of $30,000, and annual depreciation expense of $12,000. The firm is in the 20% marginal tax bracket. What is the annual cash flow in years 1 – 12?
2. In the past five years, a stock’s annual rates of return were 40%, -20%, 22%, 0%, and -10%. Compute the geometric mean annual rate of return.
3. A stock currently pays no dividends. Nine years from today, it will pay a $3/share dividend, and it will continue to pay that $3/share dividend forever after. What is the stock worth today if the required rate of return is 8%?