1) Costly Corporation is considering using equity financing. Currently, the firm's stock is selling for $66.00 per share. The firm's dividend for next year is expected to be $5.50 with an annual growth rate of 4.0% thereafter indefinitely. If the firm issues new stock, the flotation costs would equal 11.0% of the stock's market value. The firm's marginal tax rate is 40%. What is the firm's cost of internal equity? options: 11.63% 13.36% 12.67% 13.74% 12.33%

2) Marginal Incorporated (MI) has determined that its after-tax cost of debt is 7.0%. Its cost of preferred stock is 14.0%. Its cost of internal equity is 16.0%, and its cost of external equity is 21.0%. Currently, the firm's capital structure has $621 million of debt, $45 million of preferred stock, and $234 million of common equity. The firm's marginal tax rate is 25%. The firm is currently making projections for the next period. Its managers have determined that the firm should have $99 million available from retained earnings for investment purposes next period. What is the firm's marginal cost of capital at a total investment level of $465 million?

	10.34%
	9.69%
	10.99%
	9.78%
	8.48%

3)Determine the net present value for a project that costs $117,000 and would yield after-tax cash flows of $18,000 the first year, $20,000 the second year, $23,000 the third year, $25,000 the fourth year, $29,000 the fifth year, and $35,000 the sixth year. Your firm's cost of capital is 10.00%.

	-$5,123.30
	-$9,974.48
	$150,000.00
	$33,000.00
	-$11,988.56

4)Determine the internal rate of return for a project that costs $174,000 and would yield after-tax cash flows of $21,000 per year for the first 5 years, $29,000 per year for the next 5 years, and $42,000 per year for the following 5 years.

	12.88%
	10.87%
	12.15%
	10.45%
	13.56%

5) Your company has an opportunity to invest in a project that is expected to result in after-tax cash flows of $16,000 the first year, $18,000 the second year, $21,000 the third year, $24,000 the fourth year, $28,000 the fifth year, and $34,000 the sixth year. The project would cost the firm $72,000. If the firm's cost of capital is 12%, what is the modified internal rate of return?

	18.17%
	20.10%
	15.71%
	13.51%
	16.66%

6)You are evaluating a potential investment in equipment. The equipment's basic price is $187,000, and shipping costs will be $3,700. It will cost another $22,400 to modify it for special use by your firm, and an additional $9,400 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15% the third year, and 7% the fourth year. You expect to sell the equipment for 24,500 at the end of three years. The equipment is expected to generate revenues of $165,000 per year with annual operating costs of $91,000. The firm's marginal tax rate is 35.0%. What is the after-tax operating cash flow for year 1?

	$0,575
	$0,374
	$74,000
	$73,799
	$73,425