1.ASD Co. has invested in a gold mining operation that costs $75 million with an expected life of 5 years. In the first two years, the project generates an annual cash inflow of $120 million. In the third year, the company needs to consider extensive environmental and site restoration generating a cash outflow of $100 million for that year. In the final two years of the operation, cash inflows of $135 million and $150 million are generated respectively. Which of the following answers best applies to this project?

Select one:

a.The company's cash flows are conventional, and hence the NPV and IRR capital budgeting methods may conflict. If in doubt, use the NPV method.

b.The company's cash flows are conventional, and hence the NPV and IRR capital budgeting methods will give the same decision.

c.The company's cash flows are non-conventional, and hence the NPV and IRR capital budgeting methods may conflict. If in doubt, use the NPV method.

d.The company's cash flows are non-conventional, and hence the NPV and IRR capital budgeting methods will give the same decision.

2.QAZ, Co. is expected to pay a $0.72 dividend next year. If the required return on the share investment is 8% and a share currently sells for $25.44, what is the implied dividend growth rate for this company?

Select one:

a.10.83%

b.5.38%

c.5.17%

d.5.03%

3.Sarah has an urgent expense she needs to pay for now, but has no cash savings at the moment. Her uncle has offered to lend her the $1300 she needs now if she agrees to repay him $1490 in 2 years. Alternatively, Sarah has a good credit rating and could borrow the money from her bank at a rate of 6.5% per annum, compounded quarterly. What should Sarah does and Why?

Select one:

a.Borrow from her uncle as this is a better option:the effective annual rate the uncle is offering her is 7.06%.

b.Borrow from the bank as this is a better option: the effective annual rate the bank is offering her is 6.66%.

c.Borrow from the bank as this is a better option: the effective annual rate the bank is offering her is 6.5%.

d.Borrow from her uncle as this is a better option:the effective annual rate the uncle is offering her is6.88%.

4.PLM Inc. is evaluating two machines. Both machines meet the firm's quality standard. Machine X costs $40 000 initially and $1000 per year to maintain. Machine Y costs $24 000 initially and $2000 per year to maintain. Machine X has a six-year useful life and Machine Y has a three-year useful life. Both machines have zero salvage value. Assume the firm will continue to replace worn-out machines with similar machines and that the discount rate is 25%. Which machine should the firm purchase?

Select one:

a.Machine Y

b.The firm is indifferent to the two machines.

c.There is not enough information to answer the question.

d.Machine X

5.QWE Co. has just paid a dividend of $1.15 per share. The firm pays annual dividends. It is expected by analysts that the firm's earnings will grow by 8.2% per year over next six years. After that, the earnings will most likely grow at the current industry average of 5.5% per year. Analysts do not expect any changes in the payout ratio of the firm. The cost of capital is 13%. The today's share price is closest to (nearest cents):

Select one:

a.$18.41

b.$20.03

c.$17.76

d.$16.98