1. AMC has a project that will last 7 years and have an initial investment of $1,400,000. The after tax cash flows are estimated at $315,000 per year. The targeted debt-to-equity ratio of 1.5. Its pre-tax cost of equity is 14%, and its pre-tax cost of debt is 8%. The tax rate is 40%. Solve for NPV.
2. Your investment club has only two stocks in its portfolio. $40,000 is invested in a stock with a beta of 0.8, and $60,000 is invested in a stock with a beta of 1.4. What is the portfolio's beta? Round your answer to two decimal places.