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1. Your company takes out a $ 1 8,000 interest only loan over 4 years. The current prime rate is 6% APR compounded monthly. The total interest paid is closest to:
a. 1,713
b. 2,291
c. 3,240
d. 3,438
e. 4,320
f. 4,725
2. XYZ Corp has a market capitalization of $130 million, and $40 million in outstanding debt. The firms equity beta is 0.92 , risk free rate is 2%, and market risk premium is 5%. The yield on firms outstanding debt is 6.5%. What is ABC Corps WACC after tax? Assume tax rate is 35% Show your work
3. You are presented a proposal for a project. The project costs $10,000,000 and will produce after-tax cash flows of $$2,000,000 at the end of year 1, $4,000,000 at the end of year 2, and $8,000,000 at the end of year 3. What is the NPV of this project if your WACC is 14.5%?
Light Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year Cash Flow 0 –$ 38,900,000 1 62,900,000 2 – 11,900,000 a-1 What is the NPV for the project if the company requires a return of 11 percent? This..
Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1.25 coming 3 years from toda..
What are the deltas of a call option and a put option with the following characteristics?
Megan is planning for her son's college education to begin six years from today.
Should the bank go long or short on the futures contracts?
Calculate the investor’s expected before-tax internal rate of return on equity invested (BTIRR)? Calculate the debt coverage ratio.
If a company experiences a quicker inventory turnover rate and a quicker collection experience for its accounts receivable, it can expect:
Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. What is the project's cash flow for the first year (t =
A company's 'bottom line' or net income decreased. Which of the following statements is most correct?
If Treasury bills are currently paying 6.45 percent and the inflation rate is 1.4 percent, what is the approximate and the exact real rate of interest?
Decline, Inc. is trying to determine its cost of debt. The firm has a debt issue outstanding with 15 years to maturity that is quoted at 107 percent of face value. The issue makes semiannual payments and has an embedded cost of 9 percent annually. Wh..
Boeing Corporation has just issued a callable (at par) three-year, 4.7% coupon bond with semi-annual coupon payments. What is the bond's yield to maturity?
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