HIGHLIGHT ANSWERS

C. 5.33% D. 6.46% 13. A project costing $20,000 generates cash inflows of $9,000 annually for the first 3 years, followed by cash outflows of $1,000 annually for 2 years. At most, this project has different IRR(s). A. three B. one C. five D. two VE SCO 14. A payout ratio of 35% for a company indicates that: A. 35% of dividends are plowed back for growth. B. 35% of earnings are paid out as dividends. C. 65% ofearnings are paid out as dividends. D. 65% of dividends are plowed back for growth. t0 e102 15. Sensitivity analysis evaluates projects by: A. recording profitability changes while changing one variable at a time. B. testing for interrelated variables. C. ensuring that the project sponsor has proper incentives. D. forecasting changes in interest rates that would increase financing costs. 16. How much should you pay for a $1,000 bond with years to maturity if the interest rate is 12%? A. $927.90 B. $1,000.00 C. $1,075.82 D. $981.40 10%coupon, annual payments, and 5 ives a l 5% total return by purchasing a stock for $40 and selling it after one d in dividend income during the year