Noe Drilling Inc. 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, while the CFO advocates the MIRR. If the decision is made by choosing the project with the higher IRR rather than the one with the higher MIRR, how much, if any, value will be forgone, i$.$e$.,$ what's the NPV of the chosen project versus the maximum possible NPV$?$ Note that $(1)$ "true value" is measured by NPV$,$ and $(2)$ under some conditions the choice of IRR vs$.$ MIRR will have no effect on the value lost.

WACC: $8\mathrm{.}75\%$

$01234$

CFS $-$$$1,200$ $$590$ $$610$ $$170$ $$170$

CFL $-$$$2,950$ $$815$ $$815$ $$860$ $$1,650$

a$.$ $$365\mathrm{.}67$

b$.$ $$397\mathrm{.}67$

c$.$ $$0\mathrm{.}00$

d$.$ $$206\mathrm{.}78$

e$.$ $$224\mathrm{.}87$

Bosio Inc.$\text{'}$s perpetual preferred stock sells for $$95\mathrm{.}00$ per share, and it pays a $$9\mathrm{.}00$ annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of $4\mathrm{.}00\%$ of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?

a$.13\mathrm{.}47\%$

b$.10\mathrm{.}88\%$

c$.9\mathrm{.}11\%$

d$.9\mathrm{.}87\%$

e$.9\mathrm{.}47\%$

Harry's Inc. is considering a project that has the following cash flow and WACC data. What is the project's NPV$?$ Note that if a project's projected NPV is negative, it should be rejected.

WACC: $9\mathrm{.}25\%$

Year $012345$

Cash flows $-$$$1,000$ $$300$ $$300$ $$300$ $$300$ $$300$

a$.$ $$500\mathrm{.}00$

b$.$ $$145\mathrm{.}87$

c$.$ $$159\mathrm{.}37$

d$.$ $$373\mathrm{.}00$

e$.$ $$266\mathrm{.}61$

Eakins Inc.$\text{'}$s common stock currently sells for $$52\mathrm{.}50$ per share, the company expects to earn $$3\mathrm{.}00$ per share during the current year, its expected payout ratio is $70\%,$ and its expected constant growth rate is $6\mathrm{.}00\%.$ New stock can be sold to the public at the current price, but a flotation cost of $8\%$ would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? Do not round your intermediate calculations.

a$.0\mathrm{.}35\%$

b$.0\mathrm{.}71\%$

c$.0\mathrm{.}30\%$

d$.0\mathrm{.}37\%$

e$.0\mathrm{.}50\%$