Question
Please answer all 4 :) Please and thank you 2. Project A, which costs of $1,200 to purchase, will generate net cash inflows equal to
Please answer all 4 :) Please and thank you
2. Project A, which costs of $1,200 to purchase, will generate net cash inflows equal to $500, $600, $700, $800, respectively, during the next four years. The project's required rate of return is 11.8 percent. What is the modified internal rate of return (MIRR)? a. 36.20% b. 26.07% c. 10.00% d. 18.48%
3. Binham Inc. has no retained earnings. The company uses the CAPM to calculate its cost of equity, and its target capital structure consists of common stock, preferred stock, and debt. Which of the following events would reduce its WACC? a. The market risk premium increases. b. The flotation costs associated with issuing preferred stock decrease. c. The yield on Treasury bond increases. d. The company's beta increases.
4. Delta Corp. is considering two equally risky, mutually exclusive projects, both of which have normal cash flows. Project A has an IRR of 10%, while Project B's IRR is 13%. When the cost of capital is 7%, the projects have the same NPV. Given this information, which of the following statements is CORRECT? a. If the cost of capital is 8%, Project B's NPV will be higher than Project A's. b. If the cost of capital is greater than 13%, Project A's IRR will exceed Project B's. c. If the cost of capital is 12%, Project A's NPV will be higher than Project B's. d. If the cost of capital is 5%, Project B's NPV will be higher than Project A's.
5. Roaring Camp Inc. projects $2,100 of sales, $1,200 of costs other than depreciation, $400 of depreciation, and $240 of net income for next year. Its tax rate is 40%. What will be its interest expense? a. $100.00 b. $356.00 c. $900.00 d. $596.00
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