10. Beit-Jala Corp. is planning to undertake a project requiring initial investment of $105,000,000. The corp. project is expected to generate $25 million per year for 7 years. The payback period of the project.

a.

4.2 years

b.

6.9 years

c.

4.3 years

d.

5.9 years

20.MIKE Security Company can issue new bonds with a market interest rate of 14 percent. Jules marginal tax rate is 32 percent. the after-tax cost of debt, AT kd, for this company.

a.

8.9%

b.

9.5%

c.

5.9%

d.

7.9%

18. What is meant by the term 'cost of capital'?

a.

The rate of return that a company has to offer finance providers to induce them to buy and hold financial security.

b.

The rate of return that a company has to pay for its capital investments

c.

The rate of return that a company has to offer shareholders as dividends

d.

The rate of return that a company has to offer purchasers of bonds to induce them to buy