please show work

Haulin It Towing Company is considering adding more tow trucks to its fleet. The cost of the new trucks is $145,000. The project will utilize the risk adjusted discount, the firm has a beta of 1.3, the risk free rate is 7% and the return in the market is 15%. Should Haulin It add the additional trucks if the expected increased revenues will be as follows?

1. What is the required rate of return that you should use to evaluate the project

a. 7.0%

b. 15.0%

c. 17.4%

d. 19.5%

What is the NPV of the project?

a. $92,007.19

b. $57,909.51

c. $49,195.25

d. $42,054.44

Lets say instead of buying more tow trucks for its existing company, Haulin It is thinking about buying moving trucks and starting a short haul moving division. It determines that he beta for another company in town that is in that business is 1.10. What is the required rate of return they should use to evaluate this project?

a. 15.0%

b. 15.8%

c. 17.4%

d. 19.1%

Haulin It realizes that the company it was using to determine the beta of the short haul moving business is funded (by market value) 75% equity/25% debt. Haulin it intends to maintain a 50% equity/50% debt ratio. Both companies pay a tax rate of 30%.

What is the unlevered beta of the comparable company

a. 0.9

b. 1.2

c. 1.3

d. 1.5

Years	Cash Flows
1	$60,000
2	$95,000
3	$120,000

5. What is the new leveraged beta Haulin it should utilize based on the capital structure it plans to utilize? a. 0.9

b. 1.2 c. 1.3 d. 1.5

6. With the information gleaned from question 4 and 5, what is the risk adjusted required rate of return Haulin It should utilize to evaluate the project?

a. 15.0% b. 15.8% c. 16.6% d. 17.4%

8. You are considering a project and using a simulation of the NPV, you thing the projects mean NPV is $75,000 with a standard deviation of $25,000. What is the probability that the projects return will be less than $0?

a. 0.1% b. 3% c. 15.8% d. 100%

9. You are considering purchasing an e-commerce website that will sell nothing but fidget spinners. It will cost you $100,000 to buy the site and the inventory of spinners. You expect that you will net $50,000 in income each year for the first three years. You want to use the certainty equivalent approach and after some analysis you think that the certainty equivalent for the first years income is $47,000, year 2 is $42,000 and year 3 is $31,000. Basically, fidget spinners are very popular right now and this is the best site to buy them from so you are pretty confident in the first years income but you are not confident they will continue to remain popular, especially going out three years. Flill in the certainty factor for the first three years on the table below

	Certainty Factor
Year1
Year2
Year3

10. Assuming the risk free rate is 5%, using the information in question 5 and utilizing the Certainty Equivalent approach, what is the NPV of the project?

a. $0.00 b. $9,636.11

c. $36,162.40

d. $131,000