The opportunity cost associated with the firm’s capital investment in a project is called its: A) cost of capital. B) beta coefficient. C) capital gains yield. D) sunk cost. E) internal rate of return. ANSWER A
Date: September 19th, 2020
A refund anticipation loan is associated with A) electronic tax filing. B) an automatic extension for late filing. C) a tax refund in excess of $10,000. D) an unsuccessful IRS audit. ANSWER A
Date: September 19th, 2020
Foreclosure is the legal process A) for closing on a typical home purchase. B) that terminates your right to the property and forces its sale. C) that ensures marketable title at closing. D) condemning a property that has not been maintained. ANSWER B
Date: September 19th, 2020
A short position reflects the expectation of price increases. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Two projects being considered are mutually exclusive and have the following projected cash flows: Year Project A Project B 0 -$50,000 -$50,000 1 $15,625 0 2 $15,625 0 3 $15,625 0 4 $15,625 0 5 $15,625 $99,500 If the required rate of return on these projects is 10%, which would be chosen and why? A) […]
Date: September 19th, 2020
The cost of capital: A) will decrease as the risk level of a firm increases. B) is primarily dependent on the source of the funds used in a project. C) implies that a project will produce a positive net present value only when the rate of return on the project is less than the cost […]
Date: September 19th, 2020
The Housing Affordability Index is based upon the relationship between the median family income and the income necessary to qualify for a loan on a median priced home. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The overall cost of capital for a retail store: A) is equivalent to the after-tax cost of the firm’s liabilities. B) should be used as the required return when analyzing a potential acquisition of a wholesale distributor. C) reflects the return investors require on the total assets of the firm. D) remains constant even when […]
Date: September 19th, 2020
Marlin Liquidators is considering the purchase of a new $175,000 crane. If Marlin expects the cash inflows to be $45,000 after the first year, $76,000 after the second year, and $80,000 after the third year, what is the NPV if the cost of capital is 15%? Round answer to the nearest whole dollar amount. A) […]
Date: September 19th, 2020
The discount rate assigned to an individual project should be based on: A) the firm’s weighted average cost of capital. B) the actual sources of funding used for the project. C) an average of the firm’s overall cost of capital for the past five years. D) the current risk level of the overall firm. E) […]
Date: September 19th, 2020
