Married couples filing a joint return may take two standard deductions. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Martha’ s Interiors has a current beta of 1.2. The market risk premium is 6 percent and the risk-free rate of return is 4 percent. By how much will the cost of equity increase if the company completes an acquisition such that their company beta rises to 1.4? A) 0.12 percent B) 0.24 percent C) […]
Date: September 19th, 2020
Alyeska salmon Inc, a large salmon canning firm operating out of Valdez, Alaska, has a new automated production line project it is considering. The project has a cost of $275,000 and is expected to provide after-tax annual cash flows of $73,306 for eight years. The firm’s management is uncomfortable with the IRR reinvestment assumption and […]
Date: September 19th, 2020
Your lawyer presents you with a three year investment. You must invest $1,000 immediately, but you are promised after-tax cash flows of $600 after one year and another $600 after two years. What is the IRR of the investment? (Round answer to nearest percent). A) 10% B) 11% C) 12% D) 13% E) 14% […]
Date: September 19th, 2020
You will need $228,790 in 28 years to supplement your retirement funds. If you can earn 8% interest, you must save $________ each year. (Table or calculator required.) A) 8,100 B) 6,300 C) 3,600 D) 2,400 ANSWER D
Date: September 19th, 2020
Magnetic Attractions Inc a web-based dating company, needs to raise capital to finance an expansion in their business. The company is trying to decide between borrowing or issuing more equity. Selected financial information is provided in the table below. The current capital structure is shown in the column labeled “Current.” Under Option E, they will […]
Date: September 19th, 2020
Martin Industries just paid an annual dividend of $1.20 a share. The market price of the stock is $26.60 and the growth rate is 4 percent. What is the firm’s cost of equity? A) 8.38 percent B) 8.51 percent C) 8.57 percent D) 8.69 percent E) 8.74 percent ANSWER D
Date: September 19th, 2020
A payment cap can result in negative amortization. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The contract rate on adjustable rate loans is equal to the index rate plus the margin. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The market yield on Spice Grills’ bonds is 15%, and the firm’s marginal tax rate is 33%. What is their shareholders’ required return if the equity risk premium is 4%? A) 15% B) 11% C) 14% D) 19% E) 12% ANSWER D
Date: September 19th, 2020
