Question: Using the Gordon Model value a common stock expected to pay a $4 dividend next year and grow at a constant 8% in an environment

  1. Using the Gordon Model value a common stock expected to pay a $4 dividend next year and grow at a constant 8% in an environment in which its required return is 14%

  2. Suppose a firm has a project with an estimated cash flow of $400,000 in years 1-3 and $500,000 in years 4-7. If the cost of this project is $2,000,000 and the firms WACC is 12% calculate the NPV and IRR and argue for or against adoption.

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