5 You are the CEO of Warming-Up Inc. The firm faces the following five investments that are mutually exclusive (i.e., you can only pick one). Which one would you pursue? A. B. C. Increase next year's net income by $140M, increase long-term debt by $70M, and increase the market value of Warming-Up's equity by $280M. Increase next year's net income by $985M, increase long-term debt by $140M, and increase the market value of Warming-Up's equity by $565M. Increase next year's net income by $70M, increase long-term debt by $280M, and increase the market value of Warming-Up's equity by $490M. Increase next year's net income by $410M, decrease long-term debt by $70M, and increase the market value of Warming-Up's equity by $450M. Increase next year's net income by $210M, increase long-term debt by $210M, and increase the market value of Warming-Up's equity by $680M. D. E. 6 Which of the following statements regarding the weighted average cost of capital is false? A. . C. It is based in part on the aftertax cost of the outstanding liabilities. It should be used as the required return when analyzing a new project that is roughly as risky as the assets the firm already has in place. It is the return investors require on the total assets of the firm. As long as there are corporate taxes, it will change when the debt-equity ratio changes. It is unaffected by changes in corporate tax rates. D. E. 7 The bonds issued by XYZ Corporation are traded at par. Coupons are paid annually and the coupon rate is 6.6%. There are 19 years left to maturity. The face value of a bond is $1,000. What is the bond's yield-to-maturity (YTM)? A. B. C. D. E. Not able to calculate the number given available information. 3.0% 8.0% 6.6% 5.0% 8 Your local pawn shop lends money at an annual rate of 33 percent compounded daily. What is the effective annual rate being charged on these loans assuming 365 days per year? C. 28.53% 28.86% 33.00% 38.48% 39.08% D. E