I need to answer these questions and it is related finance parts.

it is ten MCQ

1. ____ A) B) C) D) Hint: With the information below, what is the estimated cost of equity for ABC Co?: Risk-free rate of interest = 3.5% Average equity market return = 10.5% Expected pre-tax cost of debt = 8.0% Estimated correlation of ABC with the market = 0.726 Estimated standard deviation of the ABC's returns = 35% Estimated standard deviation of the market's returns = 20% Corporate tax rate = 35% 7.81% 16.83% 12.39% 13.34% j . Kj = KFR + j[E(Rm) - KRF] j jm m 2. A firm whose equity has a beta of one ____ A) B) C) D) Has greater non-systematic risk than the market portfolio Has the same systematic risk as the market portfolio Has less systematic risk than the market portfolio Stands little chance of surviving in the international financial markets 3. ____ A) B) C) D) Hint: 4. A Canadian MNC borrows Japanese yen for one year at 8% from the international debt market. During the year, the yen has appreciated by 5% relative to the dollar. Given a corporate tax rate of 25%, what is the aftertax cost of this debt? 3.00% 10.05% 13.00% 13.40% rB = (1 + rB*)(1 + %s) - 1 Based on the product lines and businesses, LMN Co, a Canadian-based MNC, has estimated a potential acquisition in China with net cash flows of $11.8 million, $13.6 million and $130.5 million for the next three years, respectively. However, the possible target has outstanding debt of $11.5 million. LMN's required rate of return on similar projects is 10%. What is the target's true equity value? ____ A) B) C) D) $155.9 million $144.4 million $120.0 million $108.5 million XYZ Co. is considering an investment in either Italy or England. Consider the following cash flows for each project, assume a 12% WACC, and consider these to be average risk projects for the company. England Year 0 Year 1 Year 2 Year 3 Total cash inflows 0 8,000 8,000 8,000 Total Cash outflows 15,000 1,000 1,000 1,000 Additional cash inflows $0 $500 $500 $500 Forecast exchange rate ($/) 1.50 1.46 1.45 1.44 Italy Year 0 Year 1 Year 2 Year 3 Total cash inflows 0 12,000 12,000 12,000 Total Cash outflows 20,000 1,500 1,500 1,500 Additional cash inflows $0 $500 $500 $500 Forecast exchange rate ($/) 1.00 0.96 0.94 0.92 5. ____ A) B) C) D) The NPV for the British investment is estimated at ____. $3,092 $6,420 3,092 $0 6. The NPV for the Italian investment is estimated at ____. ____ A) 4,945 B) $4,945 C) $6,420 D) 6,420 Your firm has a line of credit with a stated interest rate of 10% per annum. Your bank requires a 25% compensating balance. 7. Suppose that your firm needs $10,000 for three months to finance a temporary deficit. How much must your firm borrow in order to obtain the needed funds? ____ A) B) C) D) Hint: $40,000.00 $7,500.00 $28,571.00 $13,333.00 RB = Stated rate / (1 - compensated balance %) 8. If the compensating balance pays interest of 4%. Assume that the money needed by your firm is only for three months. What is the annual percentage interest rate paid by your firm? ____ A) B) C) D) Hint: 15% 12% 8% 3% APR = (Financing cost / Usable funds) (Annualized factor) 9. Companies prefer to maintain higher cash balances when ____ A) B) C) D) The transaction cost of buying/selling marketable securities goes down The volatility of daily cash flow decreases The interest rates increase None of the above 10. A firm holding a ___ currency will ____ by using the ____ currency to pay hard currency debt as soon as possible. ____ A) Soft; lag; soft B) Soft; lead; soft C) Hard; lag; hard D) Hard; lead; hard