A corporation has decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $30,000 and was being depreciated under MACRS using a five-year recovery period. The existing asset can be sold for $32,000. The new asset will cost $75,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on ordinary income and capital gains, the initial investment is ______. Select one: a. $54,240 b. $57,240 c. $42,000 d. $50,040

Which of the following is FALSE? Select one: a. Weights that use accounting values to measure the proportion of each type of capital in a firm's financial structure are called market value weights. b. Use of the capital asset pricing model (CAPM) in measuring the cost of common stock equity differs from the constant-growth valuation model in that it directly considers the firm's risk as reflected by beta. c. Using the Capital Asset Pricing Model (CAPM), the cost of common stock equity is the return required by investors as compensation for a firm's nondiversifiable risk. d. Weights that use accounting values to measure the proportion of each type of capital in a firm's financial structure are called book value weights.

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