4.) (CHAPTER 18) A firm is considering a new project. If it accepts the project, it would borrow money to pay for part of the initial investment. The levered cash flows in future vears of such project equal a. unlevered cash flows PLUS tax savings from tax-deductible interest payments on debt and MINUS debt principal payment b. interest payments received by creditors in each year as well as the principal payment at the end of the loan term c. unlevered cash flows MINUS tax savings from tax-deductible interest payments on debt and MINUS debt principal payment d. operating cash flows ignoring interest payments on debt unlevered cash flows MINUS stockholders' interest expense and MINUS debt principal payment 5.) (CHAPTER 19) Which of the following is true from a tax-paying investor's point of view? a. Cash dividend is taxed just like receiving money from firm's stock repurchase transaction. b. Firm's stock repurchase is more desirable than Firm paying cash dividend. C. Cash dividend is equivalent to stock repurchase. d. Receiving money from firm's stock repurchase has the same tax effects as receiving cash dividend e. Capital gain creates a tax liability even if the investor does not sell any of the shares he owns. 6.) (CHAPTER 19) The last date on which you can purchase shares of stock and receive the next dividend is the date that is business day(s) the date of record. a. one; after b. two; after c. one; prior to d. two; prior to e. three; prior to 7.) (CHAPTER 17) A firm will earn $70 in one year if it does well. The debtholders are promised payments of $60 in one year. If the firm does poorly, however, its earnings in one year will be $50 and the repayment to debtholders will be $40 because of the direct cost of bankruptcy. The probability of the firm performing poorly or well is 50%. If bondholders are fully aware of these costs what will they pay for the debt (i.e., what is the current value of debt)? The interest rate on the bonds is 3%. a. $38.09 b. $40 c. $45.54 d. $48.54 e. $50.00