1. A project will produce cash inflows of $1,750 a year for four years. The project initially costs $10,600 to get started. In year five, the project will be closed and as a result should produce a cash inflow of $8,500. What is the net present value of this project if the required rate of return is 14.75%?
a. $1,011.40
b. -$1,306.18
c. $5,474.76
d. -$935.56
e. -$5,474.76
2. You find a stock that you believe will be worth $28.50 in one year. If you also expect that stock to pay a dividend of $.0.35 next year, what is the most you would be willing to pay for the stock now if you need an 11% return?
A. $25.68
B. $25.36
C. $25.33
D. $25.99