1. Foley Systems is considering a new investment whose data are shown below. The equipment would have a zero salvage value, and would require $15,000 additional net operating working capital that would be recovered at the end of the project's life. Operating cash flows are expected to be constant over the project's life. What is the project's NPV? (Hint: Cash flows from operations are constant in Years 1 to 3.)
WACC 10.0%
Net investment in fixed assets (basis) $75,000
Net operating working capital $15,000
Operating cash flow $41,250
Tax rate 35.0%
2. One year ago, Peyton purchased Stock A for $ 42.30 per share. During the year, he was paid a dividend of $ 3.61 per share. Today, he sold those shares for $ 49.65 a share. What is the total % return from this investment?