### Evaluating project that will increase annual cash sales

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##### Reference no: EM132049519

1. A firm is evaluating a project that will increase annual cash sales by \$145,000 and increase annual cash costs by \$94,000. The project will initially require \$110,000 in fixed assets that will be depreciated straight-line to a zero book value over the four-year life of the project. The applicable tax rate is 32 percent and the required rate of return is 10%. Compute the Net Present Value of the Project.

\$27,826

\$43,480

\$63,920

\$29,920

2. A company's most recent annual Free Cash Flow is \$180,000,000. Free cash flow is expected to grow by 15% per year for the next 10 years and then grow by 3% per year thereafter. Investors required rate of return is 11%. What is the current value of the stock?

\$11,300,755,080

\$2,250,000,000

\$5,404,011,121

\$1,636,363,636

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