A compay's weighted average cost of capital is applicable to projects that:

1. Payback within the required period of time.

2.Are considered within one year of the date of the information used in the WACC computation.

3.Are pure plays in new areas of business.

4.Represent new avenues of business for the firm.

5.Are similar in risk to the current operations of the firm.

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The term sensitivity analysis is best described as:

1.The degree to which a firm or project relies on fixed costs.

2.Investigation of what happens to NPV when only one variable is changed.

3.The determination of what happens to NPV estimates when we ask what-if questions.

4.Taking into account the managerial options that are implicit in a project.

5.The change in costs that occurs when there is a small change in output.

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The slope of the SML is equal to the............... divided by the beta of the market.

1.Total return of the market.

2.Nominal return of the market.

3.Risk-free rate of return.

4.Market risk premium.

5.Real return of the market.