Question 17 (1 point) Firm Z has outstanding bonds with a 7% yield to maturity. The firm's managers believe that they can raise new debt at a similar rate. The firm's tax-rate is 30%. Also, the firm's beta is 1.5, the return on the market is 8% and the risk-free rate is 3%. If the firm's target capital structure is evenly split between debt and common equity but no preferred stock, what is the firm's weighted average cost of capital (WACC)? A) 5.45% B) 6.20% C) 7.70% D) 8.80% O E) 9.55% Determine the increase or decrease in cash for Rinky Supply Company for last year, given the following information. (Assume no other changes occurred during the past year.) Net Income + Depreciation = $5 Increase in accounts receivables = $40 Decrease in accounts payable = $20 Decrease in inventories = $35 OA) -$20 B) +$30 OC) -$40 OD) +$10 E) - $50 American Manufacturer has the opportunity to invest in a 4-year project that requires an initial investment of $900,000 and generates cash flow of $100,000 in each of the first 2 years and $400,000 in each of the last 2 years. If the firm has a weighted average cost of capital of 10%, the firm should the project because OA) Accept; net present value is positive O B) Accept; net present value is negative OC) Reject; net present value is positive D) Reject; net present value is negative The legal document that spells out the rights of the bondholders and terms of a corporate bond is called OA) an indenture OB) a debenture OC) a covenant D) the articles of incorporation E) a warrant