Question
2) Longbow Lumber is purchasing a new horizontal resaw at a cost of $450,000. There is an additional $15,000 delivery and installation cost. The machine
2) Longbow Lumber is purchasing a new horizontal resaw at a cost of $450,000. There is an additional $15,000 delivery and installation cost. The machine has a capital cost allowance (CCA) rate of 25%. What is the incremental undepreciated capital cost (UCC) for year 1?
A. $232,500
B. $225,000
C. $465,000
D. $450,000
E. $435,000
5) Your portfolio has 50% of its value invested in Bombardier and the remainder invested in Lululemon. Bombardier stock has a volatility of 25%, while Lululemon stock has a volatility of 10%. If the correlation between Bombardier and Lululemon is 0.1, what is the standard deviation of your portfolio?
A.17.5%
B.16.7%
C.17.4%
D.13%
E.1.7%
8) Cork Bottlers has 84 million shares outstanding and expects earnings at the end of this year of $54 million. Cork plans to pay out 30% of its earnings as a dividend and 10% of its earnings through share repurchases. The firm has an equity cost of capital of 12%. If Tarmac' earnings are expected to grow by 6.5% per year and these payout rates remain constant, what is Tarmac's share price?
A.$4.68
B.$5.24
C.$3.51
D.$11.69
E.$2.14
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