fin 571 week 5 quiz
1. Genaro needs to capture a return of 40 percent for his one-year investment in a property. He believes that he can sell the property at the end of the year for $150,000 and that the property will provide him with rental income of $25,000. What is the maximum amount that Genaro should be willing to pay for the property?
2. The process of identifying the bundle of projects that creates the greatest total value and allocating the available capital to the projects is known as
3. You are considering a project that has an initial cost of $1,200,000. If you take the project, it will produce net cash flows of $300,000 per year for the next six years. If the appropriate discount rate for the project is 10 percent, what is the profitability index of the project?
4. What might cause a firm to face capital rationing?
5. The WACC for a firm is 19.75 percent. You know that the firm is financed with $75 million of equity and $25 million of debt. The cost of debt capital is 7 percent. What is the cost of equity for the firm?
6. Bellamee, Inc., has semiannual bonds outstanding with five years to maturity and are priced at $920.87. If the bonds have a coupon rate of 7 percent, then what is the YTM for the bonds?
7. Beckham Corporation has semiannual bonds outstanding with 13 years to maturity and are currently priced at $746.16. If the bonds have a coupon rate of 8.5 percent, then what is the after-tax cost of debt for Beckham if its marginal tax rate is 35%? Assume that your calculation is made as on Wall Street.
8. RadicalVenOil, Inc., has a cost of equity capital equal to 22.8 percent. If the risk-free rate of return is 10 percent and the expected return on the market is 18 percent, then what is the firm's beta if the firm's marginal tax rate is 35 percent?
9. Which type of project do financial managers typically use the highest cost of capital when evaluating?
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fin 571 week 5 quiz
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xxxxxx xxxxx to capture x return xx xx xxxxxxx xxx his xxxxxxxx xxxxxxxxxx in x property. He believes that he xxx sell xxx xxxxxxxx xx the xxx xx xxx xxxx xxx xxxxxxxx xxx that the property will xxxxxxx xxx with rental xxxxxx xx $25,000. xxxx is the maximum xxxxxx xxxx Genaro should xx xxxxxxx xx pay for the property?
The process of xxxxxxxxxxx xxx xxxxxx xx xxxxxxxx xxxx xxxxxxx the greatest xxxxx value and allocating the available capital xx xxx xxxxxxxx xx xxxxx as
xxx xxx xxxxxxxxxxx x project that has an initial xxxx xx xxxxxxxxxxx xx xxx xxxx xxx project, it will produce net xxxx xxxxx of xxxxxxxx per year for the next xxx xxxxxx If xxx xxxxxxxxxxx discount xxxx xxx the xxxxxxx is 10 xxxxxxxx what is xxx xxxxxxxxxxxxx index xx the xxxxxxxx
xxxx xxxxx cause a firm xx face xxxxxxx xxxxxxxxxx
xxx xxxx for x firm is xxxxx percent. xxx know that the xxxx xx financed xxxx xxx million of equity and xxx xxxxxxx of debt. The xxxx of debt capital xx x percent. What xx xxx cost of xxxxxx
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