In estimating the total depreciable cost for a capital budgeting problem, which of the following items shouldn't be included?

1) shipping cost

2) installation cost

3) the increase in net working capital

4) all of the above

Helms Aircraft has a capital structure that consists of 40% debt, 10% preferred stock, and 50% common stock. The before-tax costs of capital for the three components are 10%, 11%, and 15% respectively. If the companys tax rate is 35 percent, what is the companys weighted average cost of capital (WACC)?

1) 8.33%

2) 11.20%

3) 12.60%

4) 13.98%

Which of the following statements about depreciation (in estimating CFt is correct?

1) The net working capital should be depreciated.

2) The larger the depreciation, the lower the cash flow.

3)The accelerated depreciation method increases a project's NPV.

4) Depreciation has no effect on cash flow estimation.

An investor is forming a portfolio by investing $50,000 in stock a that has a beta of 1.50, and $25,000 in stock b that has a beta of 0.90. the return on the s&p 500 index is equal to 12 percent; and the return on treasury-bills is 5 percent. what is your estimate of the required rate of return on the investors portfolio?

1) 16.5%

2) 15.8%

3) 14.1%

4) 13.4%

Your fund invests evenly in 10 stocks. You want to sell one stock with a beta of 1.0 and use the money to buy another stock with a beta of 1.5. If the original portfolio has a beta of 1.15, what will be the beta for your new portfolio?

1) 1.35

2) 1.20

3) 1.15

4) 0.95