Question 15 A firm with a 14 percent WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows? Question 18 A firm with a 15 percent...

Please answer the following MCQs and T or Fs from 15 till 29

Extracted text: Question 15 A firm with a 14 percent WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows? Question 18 A firm with a 15 percent WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows? Year Project (A) Project (B) $(6000) $2000 $2000 $2000 $(18000) $5600 Project (F) $(36000) $10500 Year Project (E) $(12000) $5000 1 $5600 1 $5600 $5600 3 $5000 $10500 $2000 $2000 4 $5600 3 $5000 $10500 4 $5000 $10500 If projects A and B were mutually exclusive, according to NPV the company should accept The IRR for project F is equal to a. Project A a. 6.46% b. Projects A&B b. 13.03% c. Project B с. 3.03% d. None of the listed choices d. 61.46% Question 16 Question 20 A method for estimating project beta through finding several publicly traded companies exclusively in project's business and using average of their betas as proxy for project's Net Present Value should be used to choose between mutually exclusive projects. Select one: beta? True a. Accounting beta False b. Pure play Question 17 c. None of the listed choices d. All of the listed choices The before-tax cost of debt, which is lower than the after-tax cost, issued as the component cost of debt for purposes of developing the firm's Question 21 WACC. Select one: Johnson Industries finances its projects with 40 percent debt, 10 percent preferred stock, and 50 percent common stock? The company can issue bonds at a yield to True maturity of 8.4 percent. The cost of preferred stock is 9 percent. The company's common stock currently sells for $30 a share. The company's dividend is currently $2.00 a share (DO = $2.00), and is expected to grow at a constant rate of 6 percent per year. Assume that the flotation cost on debt and False Question 19 preferred stock is zero, and no new stock will be issued. The return stockholders could earn on alternative investments of equal risk is known as? The company's tax rate is 30 percent. What is the company's weighted average cost of capital (WACC) a. None of the listed choices a. 9.99% b. Fixed cost b. 8.33% c. Opportunity cost с. 9.32% d. Variable cost d. 9.79% O O O O оооо O O O O O O


Extracted text: Question 22 Question 26 Non normal cash flow project is a project with two or more changes of cash flow signs. Select one: Corporate risk is known as? a. Unsystematic / diversifiable risk True b. Unsystematic / non diversifiable risk False c. None of the listed choices Question 27 d. Systematic / non diversifiable risk Firms with riskier projects generally have a higher WACC. Question 23 Select one: A firm with a 14 percent WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as True follows? False Project (A) $(6000) Project (B) $(18000) $5600 $5600 $5600 $5600 $5600 Year 1 $2000 $2000 2 Question 28 $2000 $2000 $2000 3 4 5 A conflict between the results for N.P.V and IRR method for two mutually exclusive projects indicates that the cost of capital (k) is greater than the crossover rate for these two projects. The Net Present Value for project B is equal to a. 1219.2 Select one: b. $ 864 c. $ 23.25 True d. $ 29.6 False Question 24 Question 29 Corporate risk is theoretically best in most Independent projects are Projects whose cash flows are not affected by the acceptance or no acceptance of other projects. Select one: situations. Select one: True True False Question 25 False Suppose that you are assigned the task of evaluating two mutually exclusive projects, with negative Net Present Value, in this case you will reject the one with higher negative net present value. Select one: True False O O O O O O O O O O