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In valuing a share of common stock, the value k (the required rate of returm) increases as: A. The firms risk increases. B. The economy's
In valuing a share of common stock, the value k (the required rate of returm) increases as: A. The firms risk increases. B. The economy's risk increases (and people become more risk averse). C. Anticipated inflation decreases. D. All of the above. E. A and B only. F. A and C only. G. B and C only. H. None of the above. Whenever the IRR on a project equals that project's required rate of return: A. the NPV equals the initial investment. B. the profitability index equals 0. C. the NPV equals 0. D. the NPV equals 1. Compute the payback period for a project with the following cash flows, if the company's discount rate is 12%. Initial outlay $450 Cash Flows: Year 1 Year 2 $65 Year 3 $100 325 A. 2.88 years B. 3.17 years C. 2.6 years D. 3.43 years A bond that matures in 13.5 years has a $1,000 par value. The annual coupon rate of 7 percent and the market's required yield to maturity on a comparable-risk bond is 14.78 percent. What would be the value of this bond if it paid interest semiannually? A. $255.27 B. $550.40 C. $674.66 D. $954.92 E. $967.38
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