1. You are evaluating a project which requires $230,000 in external financing. The flotation cost of equity is 11.6 percent and the flotation cost of debt is 5.4 percent. What is the initial cost of the project including the flotation costs if you maintain a debt-equity ratio of 0.45?

2. A stock just paid dividends of $2 per share. Growth of these dividends is expected to be 20% for the next two years followed by constant growth of 8% thereafter. The required return is 12% what price should this stock sell for?

3. A 30-year, $200,000 adjustable-rate mortgage starts out with the rate of 4%. The borrower makes only the required payments in the first year. If after one year the rate resets to 6%, what is the new required payment?