Reference no: EM13752926
Question 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?
- $150,000
- $137,500
- $112,500
- $125,000
Question 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
- capital rationing.
- risk analysis.
- budgeting.
- rationing.
Question 3: Capital rationing. 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?
Question 4: What might cause a firm to face capital rationing
- If investors require returns for their capital that are too high.
- If a firm has several projects that are expected to generate negative IRR's.
- If a firm rejects some capital investments that are expected to generate positive NPV's.
- If a firm has more than one project with a positive NPV.
Question 5: How firms estimate their cost of capital: 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?
- 19.75%
- 58.00%
- 24.00%
- 32.50%
Question 6: The cost of debt: 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?
Question 7: The cost of debt: 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.
Entry field with correct answer
- 12.890%
- 8.125%
- 12.500%
- 6.250%
Question 8: The cost of equity: 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?
Question 9: Which type of project do financial managers typically use the highest cost of capital when evaluating?
- New product projects
- Market expansion projects
- Efficiency projects
- Extension projects
|
Key data about the proposed projects
: Any unused portion of this budget will earn less than its 20 percent cost of capital. A summary of key data about the proposed projects follows.
|
|
Relationship between economic activities and bond prices
: Is there a relationship between economic activities and bond prices? Explain using real world examples. Select any global market and discuss the make of its bond market to be compared with the U.S. bond market.
|
|
Write a brief paper on discovery of a time capsule
: write a brief paper on Discovery of a Time Capsule. Explain why each of these is especially important in defining the era of the 1960s.
|
|
Prepare a production budget and a direct materials budget
: Each unit sells for $25. Each unit requires 2 yards of fabric, which is estimated to cost $3.50 per yard. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. Cling..
|
|
Total value and allocating available capital to the projects
: 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
|
|
Prepare journal entries and financial statement for year end
: Prepare journal entries and financial statement for the year ended December 31, 2014. No adjusting entries have been made since December 31, 2013. Company A rented idle office space to Company B on February 1, 2014, at a rate of $1300 per month. on t..
|
|
Determine a complete material requirements plan
: Use the following information and the attached editable MRP tableau worksheet to determine a complete material requirements plan for the 5 week planning horizon.
|
|
Fixed and variable cost behavior
: Killy and a key supplier have entered into an arrangement that will result in a per-unit decrease in Killy's variable cost of $0.50 next year. Rental space will also be reduced, thereby decreasing fixed costs by 10 percent. Given the new cost equatio..
|
|
Projected return on investment
: Develop a three- to four-page analysis (excluding the title and reference pages) on the projected return on investment for your college education and projected future employment. This analysis will consist of two parts:
|