Please explain step-by-step for each of the following, also please provide the formulas for each questions.

1) A project will increase revenue from $1.9 million to $2.6 million.Wages are 50% of revenue.Maintenance on the machine will be $25,000 less than it is on the machine that will be replaced.

What is the incremental revenuethat willresult from accepting this project?

Select one:

a.$0.325 million

b.$0.375 million

c.$0.700 million

d.$0.350 million

2) A machine with a purchase price of $11,000 is to be depreciated over its useful working life of 6 years to a book value of zero, using straight-line depreciation.

What is the book value of the machine after 3 years?

Select one:

a.$5400

b.$11000

c.$5500

d.$10900

3) A machine with a purchase price of $6,000 is to be depreciated over its useful working life of 10 years to a book value of zero, using diminishing value depreciation.

What is the amount of depreciation in Year 1?

Select one:

a.$1200

b.$1100

c.$600

d.$300

4) A project requires the purchase of new equipment at a cost of $18,000, which will be depreciated over the life of the asset.A further $5000 spent on transport and installation will be added to the purchase price of the equipment for depreciation purposes, and $1000 will be spent on advertising and other operating expenditure to get the project up and running.

What is the value of the asset for depreciation purposes?

Select one:

a.$24,000

b.$19,000

c.$23,000

d.$18,000

5) Project Beta is a 3-year project which requires an initial outlay of $3,000.This outlay will be depreciated usingstraight-line depreciation over the life of theproject.It will generate incremental revenue of $6000 per year and incremental costs (excluding depreciation) of $1200.The tax rate is 20%.

What is the project's annual incremental EBIT?

Select one:

a.$2800

b.$3800

c.$5800

d.$3800

6) Project Beta is a project which will last for 4 years and which requires an initial outlay of $4,000.This outlay will be depreciated usingstraight-line depreciation over the life of theproject.It will generate incremental revenue of $4000 per year.The value of incremental, after-tax earnings is $1332 per year.The project will require Net Working Capital equal to 20% of incremental revenue.

What is the value of incremental free cash flow in Year 0?

Select one:

a.$-4800

b.$4800

c.$-3200

d.$3200

7) Equipment with a book value of $5,000 will be sold at the end of a project for a salvage value of $10,000.The tax rate is 25%.What is the tax effect resulting from the profit or loss from the sale of the equipment (where a negative number means tax is payable and a positive number means that there is a tax shield)?

Select one:

a.$1250

b.$-1250

c.$-2500

d.$2500

8) A project will incur $700 in shutdown costs the year after the completion of the project.The tax rate is 40%.What is the tax shield resulting from these tax-deductible shutdown costs (where a negative number means a cash outflow and a positive number means an incremental cash inflow)?

Select one:

a.$-280

b.$280

c.$240

d.$-240

9) A share is expected to pay an annual dividend of $2.42 next year, and this dividend is then expected to grow at a constant rate of 2.2% p.a. in perpetuity.If the required rate of return is 11.2% p.a., what is the value of the share?

Select one:

a.$21.61

b.$23.71

c.$26.89

d.$27.48

10) A preference share pays a constant dividend of $1.47 and is currently priced at $25.26.The corporate tax rate is 30%.What is the before-tax cost of preference shares?

Select one:

a.0.0507

b.0.0407

c.0.0285

d.0.0582

11) A share has a beta of 1.2.The risk-free rate of return is 2.0% and the expected return on the market is 11.9%.What is the expected return on the share?

Select one:

a.13.88%

b.18.26%

c.13.90%

d.16.28%

12) A firm has three components in its capital structure: debt, preference shares and ordinary shares.The before-tax cost of debt is4.0%, the before-tax cost of preference shares is 7.2%and the before-tax cost of ordinary shares is 12.8%.The proportion of debt in the capital structure is 15%, the proportion of preference shares is 21% and the proportion of ordinary shares is 64%.The corporate tax rate is 30%.

What is the firm's Weighted Average Cost of Capital?

Select one:

a.7.21%

b.9.67%

c.10.30%

d.10.12%

13) What is the value of a bond with a face value of $400, 7 years to maturity and an annual coupon paid at a coupon rate of 6.9%, if it is trading at a yield of 4.3% p.a.?

Select one:

a.$461.74

b.$455.70

c.$457.59

d.$458.78

14) A company has issued a series of debentures which have a face value of $800 and pay a semi-annual coupon at a coupon rate of 9.0%.What is the value of each coupon payment?

Select one:

a.$18.00

b.$72.00

c.$36.00

d.$144.00

14) What is the value of a bond with a face value of $900, 7 years to maturity and a semi-annual coupon paid at a coupon rate of 8.0%, if it is trading at a yield of 3.8% p.a.?

Select one:

a.$1128.56

b.$1121.62

c.$1123.49

d.$1130.43

15) What is the value of a preference share that pays an annual dividend of $10.00 if the required rate of return is 6.8% p.a.?

Select one:

a.$148.55

b.$150.39

c.$9.36

d.$147.06