8. What is the payback period for the following cash flows: today,-$6,000; end ofyear one, + $3,000; end of year two, + $1,300; end of year three, + $5,000.

Question 8 options:

A) 3 years

B) 2 years

C) 2.34 years

D) 2.9 years

E) 1 year

Question 9(4 points)

9. What is the profitable index (PI) if you invest $10,000 today and if the sum of the time value of money of the future Cash Flows from Assets (CFFA) is $30,500? / and, should you accept or reject the project?

Question 9 options:

A)0.328 / Reject

B)0.328 / Accept

C)3.05 / Reject

D)3.05 / Accept

E)$30,500 / Accept

Question 10(4 points)

10. In the NPV calculation if you isolate one variable at a time to do robustness checks on your original base estimates, then that is called

Question 10 options:

A) Sensitivity analyses

B) Scenario analyses

C) Value at risk (VAR) analyses

D) Average accounting return analyses

E) Internal rate of return analyses

Question 11(4 points)

11.IRR and Profitability Index accept/reject decision might differ from NPV when there are

Question 11 options:

A)All negative cash flows

B)mutually exclusive projects

C)independent projects

D) inflation adjusted cash flows

E) both (A) and (C)

Question 12(4 points)

12. A reduction in the sales of an existing product of the firm caused by the introduction of a new product is an example of a(n)

Question 12 options:

A)sunk cost

B)opportunity cost

C)erosion (side effects)

D)fixed cost

E)synergy (side effects)

Question 13(4 points)

13. The payback method of analysis is the "most beneficial" to use in which one of the following situations?

Question 13 options:

A) A firm that is considering a long-term research project.

B) A firm that can either build a bowling alley or a miniature golf course on the same piece of land, but not both.

C) A ski resort is considering adding a golf course to increase revenues.

D) A short-term project that the firm regularly does in-the course of business.

E) The Federal Government evaluating a new COVID vaccine.

Question 14(4 points)

14.Is it fair to say that the NPV is the most theoretically correct evaluation technique among the five-decision criterion typically used in business capital budgeting?

Question 14 options:

TrueFalse

Question 15(4 points)

15.The Consolidated Transfer Co. has a beta of .75, the market risk premium is 8% and the risk-free rate is 4%.What is the Cost of Equity for Consolidated?

Question 15 options:

A) 7%

B) 8%

C) 9%

D) 10%

E) 13%

Question 16(4 points)

16. If a firm's preferred stock pays a $6 dividend and its current price is $70, what is the cost of preferred stock?

Question 16 options:

A) 8.57%

B)6%

C) 11.67%

D) 76%

E) Not enough information to tell

Question 17(4 points)

17.When the cost of equity is 14%, the cost of debt is 8%, the marginal tax rate is 30% and the capital structure is 50% equity and 50% debt, what must be the weighted average cost of capital (WACC)?

Question 17 options:

A) 22%

B) 8%

C) 11%

D) 2%

E) 9.8%

Question 18(4 points)

18.What is Amazon's cost of debt if the coupon rate is 6%, the current bond price is $990, and there is twenty-two years left to maturity.

Question 18 options:

A) 6%

B) 6.084%

C) 3.042%

D) 2.656%

E) 12%

Question 19(4 points)

19.If the market value of equity is $500m and the market value of debt is $720m, then what are the capital structure weights?

Question 19 options:

A)W_E= 41% and W_D= 59%

B) W_E= 59% and W_D= 41%

C)W_E= 50% and W_D= 50%

D)W_E= 70% and W_D= 30%

E)W_E= 20% and W_D= 80%