3001 Fall 2017 The primary reason the economic break-even qancity is greater than the accounting break-even quantity isthe dueto investment tocoveranes a. b. the need to cover th cost ofcapial on stment need to generase a postive cash flow hom inv If you have as investment offering 12 percemt APR compounded monthly, what is the efflective anmual rate (EAR) b, c. 12.00% 1268% ens of$3,000, begining two 13. A casb-strapped young professional offers to buy your car with fowr, 59,000 for the car, should you accepe? equal-I reindiferent to versus cred,that you can invest at 10% and that you-toreceive a Yex; presint value is $9,510 b. No; present value is $8,645 e. No; present value is $7,859 14. You bough a sock one year ago for $50 and sold it today for $44. Daring the year the company paid S 1/share in dividends W was your realized return? On the stock. a. (100%) b. (140%) e. 14.0% Use the following for questions 15 to 17. The opportunity cost of capital is 10 percent Year Project A -$16,000 11,000 8,000 2,922 15Calculate the IRR. a. 18% b.20% c.22% 16. Calculate the NPV if the discount rate is 10 percent $5,922 a b. $2,807 17. What is the Proitability Index (PD)? a. 0.175 (0.175) . 0.370 18. When would a reduction in cash dividends be in the best interests of current shareholders? a. When the firm has an opportunity to invest in positive NPV projects b. When paying the dividend would cause the book value of equity to be negative c. Never. Investors always want higher dividends. 19, A three-year bond has 80% coupon rate and face value of $1000. Ir the yield to maturity on the bond is 10%, calculate the price of the bond assuming that the bond makes annual coupon interest payments a. S 751.31 b. S 950.26 c. S1,05154