3)Gateway Communications is considering a project with an initial fixed assets cost of $1.63 million that will be depreciated straight-line to a zero book value over the 10-year life of the project. At the end of the project the equipment will be sold for an estimated $233,000. The project will not change sales but will reduce operating costs by $384,000 per year. The tax rate is 40 percent and the required return is 10.8 percent. The project will require $48,500 in net working capital, which will be recouped when the project ends. What is the project's NPV?

A)$138,291

B)$175,685

C)$182,712

D)$144,577

E)$188,803

4)Smathers Corp. stock has a beta of 1.18. The market risk premium is 7.50 percent and the risk-free rate is 3.06 percent annually. What is the company's cost of equity?

A)8.30%

B)7.84%

C)11.91%

D)8.07%

E)10.10%