What is the net present value of this project

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1. Strange Manufacturing Company is purchasing a production facility at a cost of $21 million. The firm expects the project to generate annual cash flows of $7 million over the next five years. Its cost of capital is 18 percent. What is the net present value of this project? (Do not round intermediate computations. Round final answer to nearest dollar.)

$777,713

$905,888

$890,197

$1,213,909

2. SQT, Inc. currently pays a $2 annual dividend. Investors believe that dividends will grow at 20% next year, 12% for the following year, and 6% annually thereafter. The required return is 10%. What is the current price of the stock?

A. $69.34

B. $63.27

C. $60.80

D. $54.90

Reference no: EM132003256

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