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In Exam 4 (page 2 of 25) - Google Chrome X moodle.mc.edu/mod/quiz/attempt.php?attempt=749278&cmid=927417&page=1 MCmoodle MC FIN341.B-Fall 2020/Full Term/10592 - Business Finance Question 2 Tom is an analyst at a company is trying to decide what cost of capital he should assign to a project. Which one of the following should be his primary consideration in this decision? Quiz navigation Not yet 3 4 5 6 8 9 answered Select one: Points out of 10 11 12 13 14 15 16 17 18 4,00 O a. Use of preferred stock to finance the project Flag question O b. Risk level of the project 19 20 21 22 23 24 25 O c. Length of the project's life O d. Mix of funds used to finance the project Finish attempt ... O e. Amount of debt used to finance the project Time left 0:31:07 Previous page Next page Type here to search O 5:43 PM " 11/15/2020In Exam 4 (page 3 of 25) - Google Chrome X moodle.mc.edu/mod/quiz/attempt.php?attempt=749278&cmid=927417&page=2 MCmoodle MC FIN341.B-Fall 2020/Full Term/10592 - Business Finance Question 3 You were hired as a consultant for a firm whose target capital structure is 40% debt and 60% common equity. The interest rate on debt is 8%, and the common stockholders require a 15% return. Quiz navigation Not yet If Congress passes a law that lowers the company's tax rate, the weighted average cost of capital (WACC) will now be: 3 4 5 6 8 9 answered Points out of Select one: 11 12 14 15 16 17 18 4,00 O a. unaffected Flag question O b. impossible to calculate 19 20 21 22 23 24 25 O c. higher Finish attempt ... O d. lower Time left 0:31:02 Previous page Next page Type here to search O 5:43 PM "11/15/2020In Exam 4 (page 11 of 25) - Google Chrome X moodle.mc.edu/mod/quiz/attempt.php?attempt=749278&cmid=927417&page=10 MCmoodle MC FIN341.B-Fall 2020/Full Term/10592 - Business Finance Question 11 Tesar Chemicals is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO believes the IRR is the best selection criterion, Quiz navigation Not yet while the CFO advocates the NPV. If the decision is made by choosing the project with the higher IRR rather than the one with the higher NPV, how much, if any, value will be forgone, i.e., what's the chosen NPV versus 3 4 5 6 8 9 answered the maximum possible NPV? Note that (1) "true value" is measured by NPV, and (2) under some conditions the choice of IRR vs. NPV will have no effect on the value gained or lost. Points out of 10 11 12 13 14 15 16 17 18 4,00 WACC: 7.75% Flag question 2 19 20 21 22 23 24 25 CFS -$1,100 $550 $600 $100 $100 CFL -$2,700 $650 $725 $800 $1,400 Finish attempt ... Time left 0:30:57 Select one: O a. $95.84 O b. $133.18 O C. $118.25 O d. $124.47 O e. $102.07 Previous page Next page Type here to search O 5:43 PM " 11/15/2020
