1points

Item 1

Dyrdek Enterprises has equity with a market value of $11.2 million and the market value of debt is $3.75 million. The company is evaluating a new project that has more risk than the firm. As a result, the company will apply a risk adjustment factor of 1.9 percent. The new project will cost $2.28 million today and provide annual cash flows of $596,000 for the next 6 years. The company's cost of equity is 11.23 percent and the pretax cost of debt is 4.92 percent. The tax rate is 21 percent. What is the project's NPV?

Multiple Choice

$224,782

$202,146

$376,533

$533,417

$220,615

You can exchange $1 for either Can$1.1369 or 112.30. What is the cross-rate between the Canadian dollar and Japanese yen?

Multiple Choice

Can$.0093/

Can$.0101/

Can$87.8021/

Can$127.6739/

Can$98.7774/

You are given the following information for Lighting Power Company. Assume the companys tax rate is 23 percent.

Debt:	23,000 7.2 percent coupon bonds outstanding, $1,000 par value, 19 years to maturity, selling for 106 percent of par; the bonds make semiannual payments.
Common stock:	560,000 shares outstanding, selling for $74 per share; the beta is 1.17.
Preferred stock:	25,000 shares of 5 percent preferred stock (review my Ch.8 slide 43: what does "...% preferred stock" phrase mean?) outstanding, a $100 par value, currently selling for $95 per share.
Market:	7 percent market risk premium and 5.1 percent risk-free rate.

What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)