The firm would seek to enter business

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Reference no: EM131924607

1. In order to reduce risk, the firm would seek to enter a business that

a. has a zero correlation with its present business.

b. has a high positive correlation with its present business.

c. has a high negative correlation with its present business.

d. has a high negative variation with its present business.

2. Kivenan Corporation has just chosen to undertake a project with a cost of $55,000. The project is expected to generate earnings of $25,000 per year for 3 years. Assume that the company's tax rate is 34% and that the asset is part of the 3-year MACRS category (33% first year depreciation).

Calculate the cash flow from the project in year 1.

a. $16,800

b. $16,667

c. $22,671

d. $20,250

e. $15,100

Reference no: EM131924607

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