The pre-tax cost of debt for a firm: A) is equal to the yield to maturity on the outstanding bonds of the firm. B) is equal to the coupon rate of the outstanding bonds of the firm. C) is equivalent to the current yield on the outstanding bonds of the firm. D) is based on […]
Date: September 19th, 2020
Medical expenses can be claimed as itemized expenses without any limitations. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The Atchison, Topeka &Santa Fe Railway (ATSFR) is currently all equity financed, but it is considering a leveraged capital structure. Selected financial information for ATSFR is provided in the table below. Assume that ATSFR generates perpetual annual EBIT at a constant level. Assume that all cash flows occur at the end of the year and […]
Date: September 19th, 2020
What is the profitability index of a project that has a current cost of $100,000 and expected cash flows of $50,000 at the end of each of the next 7 years if the cost of capital is 20%? A) .001 B) .018 C) 1.80 D) 1.18 E) 1.25 ANSWER C
Date: September 19th, 2020
What is the optimal capital structure? A) The capital structure that frees up the most cash flow B) The capital structure that makes management the most money C) The capital structure that produces the highest firm value D) The capital structure that keeps the most control within the company ANSWER C
Date: September 19th, 2020
Giant Koala Stores Inc has forecasted sales for July and August in the top row of the table. Giant Koala makes 85% of its sales for cash and the remainder on credit. The credit sales are collected one month after the sale. What are Giant Koala’s forecasted total cash inflows in August? Sales Forecast and […]
Date: September 19th, 2020
An annuity contract will pay you $4,000 a year (end of year) for the next three years. Or, you can choose to receive $12,610 at the end of the third. Assuming that you can earn 8% on investments, you should A) choose to receive the $4,000 annuity payments. B) choose to receive the $12,610 payment. […]
Date: September 19th, 2020
What is the Profitability Index of the Airbus A380 project? The Airbus A380 is the largest civilian aircraft ever built. It can carry 555 passengers on two decks. Initial project investments were $13B. Assume that the initial investment was paid on Dec 31, 2008. Assume that Airbus will produce 60 aircraft per year for five […]
Date: September 19th, 2020
Harry Starr, a college student, earned $4,000 and claimed one personal exemption. Harry’s father still can claim Harry as a dependent and also take the exemption. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Windy City Kite Company has prepared sales forecasts for the first quarter of Year 3 as shown in the top row of the table. Half of Windy City’s kite sales are cash and the other half are credit. Windy City collects credit sales the month following the credit sale. How much of the total January […]
Date: September 19th, 2020
