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What is wacc if the yield to investors on capco debt

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Reference no: EM132554695

Question 1: A project will generate cash inflows of $10 000 next year and $20 000 in the following year. Initial costs are $5000. The cost of capital is 8% The NPV of this project is:

A. $21 406

B. $23 295

C. $20 000

D. $22 400

Question 2: Capco has a capital structure that is composed of $10 million of debt and $30 million of ordinary shares. If CapCo is in the 30% marginal tax rate, what is its WACC if the yield to investors on CapCo debt is 8% and the cost of CapCo ordinary shares is 12%.

A. 10.40%

B. 30%

C. 8.3%

D. 11.0%

Question 3: A firm that moves from traditional inventory stocking methods to a just-in-time (JIT) system should expect to see:

A. Its inventory turnover increase and its average age of inventory decrease

B. Its inventory turnover decrease and its average age of inventory increase

C. Its inventory turnover increase and its average age of inventory increase

D. Its inventory turnover decrease and its average age of inventory decrease

Question 4: A firm that moves from traditional inventory stocking methods to a just-in-time (JIT) system should expect to see:

A. Its inventory turnover increase and its average age of inventory decrease

B. Its inventory turnover decrease and its average age of inventory increase

C. Its inventory turnover increase and its average age of inventory increase

D. Its inventory turnover decrease and its average age of inventory decrease

Question 5: Which of the following is not, according to John Maynard Keynes, a motive for holding cash?

A. The precautionary motive

B. The tax avoidance motive

C. The speculative motive

D. The transactions motive

Reference no: EM132554695

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