Please ignore the filled in answers.....they are incorrect

1.) The capital budgeting manager for XYZ Corporation, a very profitable high technology company, completed her analysis of Project A assuming 5-year depreciation. Her accountant reviews the analysis and changes the depreciation method to 3-year depreciation. This change will

Choose one answer.

a. increase the present value of the NCFs.

b. decrease the present value of the NCFs.

c. have no effect on the NCFs because depreciation is a non-cash expense.

d. only change the NCFs if the useful life of the depreciable asset is greater than 5 years.

2.)Asian Trading Company paid a dividend yesterday of $5 per share (D0 = $4). The dividend is expected to grow at a constant rate of 8% per year. The price of Asian Trading Company's stock today is $29 per share. If Asian Trading Company decides to issue new common stock, flotation costs will equal $2.50 per share. Asian Trading Company's marginal tax rate is 35%. Based on the above information, the cost of retained earnings is

Choose one answer.

a. 28.38%.

b. 24.12%.

c. 26.62%.

d. 31.40%.

3.) Two factors that cause the investor's required rate of return to differ from the company's cost of capital are

Choose one answer.

	a. taxes and risk.
	b. transactions costs and risk.
	c. taxes and transactions costs.
	d. risk and opportunity cost differences.

4.) Kitchen Inc. is considering the following 3 mutually exclusive projects. Projected cash flows for these ventures are as follows: Plan A Plan B Plan C Initial Initial Initial Outlay=$3,600,000 Outlay=$6,000,000 Outlay=$3,500,000 Cash Flow: Cash Flow: Cash Flow: Yr 1=$ -0- Yr 1=$4,000,000 Yr 1=$2,000,000 Yr 2= -0- Yr 2= 3,000,000 Yr 2= -0- Yr 3= -0- Yr 3= 2,000,000 Yr 3=2,000,000 Yr 4= -0- Yr 4= -0- Yr 4=2,000,000 Yr 5=$7,000,000 Yr 5= -0- Yr 5=2,000,000

If The Kitchen has a 12% cost of capital, what decision should it make regarding the projects above?

Choose one answer.

	a. Accept plan A
	b. Accept plan B
	c. Accept plan C
	d. Accept all plans

5.) A corporation expects a new project to generate $800,000 in revenues, $250,000 in cash operating expenses, and depreciation expense of $150,000 in each year of its 10-year life. The corporation's tax rate is 35%. The project will require an increase in net working capital of $85,000 in year 1 and a decrease in net working capital of $75,000 in year 10. What is the free cash flow from the project in year 1?

Choose one answer.

	a. $298,000
	b. $375,000
	c. $380,000
	d. $410,000