Q12. A firm is considering a $200,000 project that will last 3 years and has the following financial data: - Annual after-tax cash flows are expected to be $90,000.
- Target debt/equity ratio is 0.4.
- Cost of equity is 14%.
- Cost of debt is 7%.
- Tax rate is 34%.
Determine the project's payback period and net present value (NPV). Payback Period NPV
A) 2.43 years $18,716 B) 2.22 years $18,716 C) 2.22 years $21,872
Q13. The process of evaluating and selecting profitable long-term investments consistent with the firm’s goal of shareholder wealth maximization is known as: A) financial restructuring. B) monitoring. C) capital budgeting.
Q14. A company is considering the purchase of a copier that costs $5,000. Assume a cost of capital of 10 percent and the following cash flow schedule: - Year 1: $3,000
- Year 2: $2,000
- Year 3: $2,000
Determine the project's NPV and IRR. NPV IRR
A) $883 20% B) $243 20% C) $883 15%
Q15. Which of the following statements about the payback period is FALSE? A) The payback period provides a rough measure of a project's liquidity and risk. B) The payback method considers all cash flows throughout the entire life of a project. C) The payback period is the number of years it takes to recover the original cost of the investment.
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发表于 2009-1-22 09:21
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