Question 11 3.34 pts TransMotors Inc. currently has a required return on its assets/unlevered WACC of 12.0%. It plans to borrow $3,000,000 at an interest rate of 6.0%. It has EBIT of $2,000,000 and a tax rate of 25.0%. Using the MM Proposition with taxes what is the value of the company before it borrows the $3,000,000 and the levered value of the total company (not the equity) after it borrows the $3,000,000? O $13,250,000 $12,500,000 $17,416,667 $13,000,000 Question 12 3.34 pts Iden Inc. produced 50,000 units in year 1 and had operating cash flow of $600,000 and a sales price per unit of $51.00. In year 2 unit, sales are expected to increase to 60,000. The company has a degree of operating leverage of 1.75. What will the operating cash flow be in year 2? Question 13 Project A has an NPV of $135,934 and an IRR of 17.1%. Project B has an NPV of $145,400 and an IRR of 16.4%. Which project would you select? Project A Project B Question 14 3.34 pts 3.34 pts You own two bonds, Bond Y and Bond Z. Bond Y matures in 4 years and Bond Z matures in 6 years. They both have the same coupon rates. If interest rates increase or decrease which bond would you expect to have the largest change in market price? Question 15 3.34 pts Vex Corp. is evaluating various capital projects using the net present value method and uses the profitability index to rank projects. The following are the costs and NPV for three projects it is considering. Project Cost $250,000 Y Z $435,000 $375,000 Which project would you rank as #1? Question 16 NPV $13,000 $29,500 $20,000 3.34 pts NuCorp currently has no debt outstanding but can borrow at an interest rate of 5.5%. The company's WACC is 10.25% and assume there are no income taxes. If the company adjusts its capital structure to 25% debt and 75% equity, what will be its cost of equity? (round to one decimal place) Question 17 3.34 pts You purchased a bond with a par value of $1,000, coupon of 7.00%, and it will mature in 8 years. It pays interest on a semi-annual basis and the yield to maturity when you purchased it was 8.15%. What was the price you paid? $1,000.00 $592.33 $933.37 $937.58 Question 18 3.34 pts Gram Corp. is publicly-traded and its stock has a beta of 1.15. The expected return on the overall market is 7.0%. The current 20-year treasury rate is 2.0%. What is Gram's cost of equity using the CAPM? 10.05% 7.75% 9.0% 8.05% Question 19 See the following financial statements for 2018 and 2019. Question 16 details 2018 2019 Revenue Cost of goods sold Gross profit Expenses $3,500.0 $3,650.0 $2,650.0 2,750.0 850.0 900.0 450.0 475.,0 Depreciation 75.0 85.0 EBIT 325.0 340.0 Interest expense 10.0 12.0 EBT 315.0 328.0 Taxes 75.0 78.0 Net Income $240.0 $250.0 Total Current Assets $410.0 $540.0 Fixed Assets - Net 550.0 615.0 Total Assets 960.0 1,155.0 Total Current Liabilities 295.0 305.0 Debt Outstanding Total Liabilities Common Stock [1] Retained Earnings [1] 160.0 170.0 455.0 475.0 75.0 85.0 430.0 595.0 Total Liabilities and Equity [1] Raised equity of $25 and paid a dividend of $85 What is the Cash Flow from Assets (CFFA) for 2019? $155.0 $77.0 $197.0 O $227.0 Question 20 $960.0 $1,155.0 3.34 pts 3.34 pts Moog International evaluates capital projects using the net present value, internal rate of return, profitability index, and payback methods. Project A200X has an IRR of 12.0%, profitability index of 1.0, an initial cash outflow of $250,000, and a payback period of 3 years and 5 months. For capital projects management requires a rate of return of 12.0%. What is the project's net present value?