1. Project A requires an initial investment of $10,000 at t = 0. Project A has an expected life of 5 years with after-tax cash inflows of $3,000, $3,500, $1,500, $1,750, and $4,000 at the end of Years 1, 2, 3, 4, and 5 respectively. The project has a required return of 6%. What is the equivalent annual annuity?
2. Stock A has a current price of $25.00, a beta of 1.25, and a dividend yield of 6 percent. If the Treasury bill yield is 5 percent and the market portfolio is expected to return 14 percent, what should Stock A sell for at the end of an investor's two-year investment horizon?
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