Question 17 10 pts In a Scenario Analysis, a decision maker may be uncertain of the firm's future WACC. The Scenario Analysis is used for a what if impact of a range of circumstances. Use the table below with a decision maker determining that the WACC may vary over the life of the project by +5% and the future cash flows may vary by +25% from the baseline estimates. What is the best case scenario of the net present value and the worst case scenario of the net present value using the Scenario Analysis for Project B with a WACC of 10%? YEAR PROJECT A PROJECT B 1.100 -2.750 HO 400 725 390 140 Question 18 5 pts In a Sensitivity Analysis, a decision maker may be uncertain of the firm's future WACC. The sensitivity analysis is used to reveal the impact of variance in the WACC. With a baseline estimate of the WACC at 10%, and the assumption that the WACC has increased to 15% in the future, what is the baseline net present value and the new net present value using the sensitivity analysis for Project A? YEAR PROJECT A PROJECT B - 1,100 -2.750 725 725 400 390 380 370 360 800 1,400 deltastate instructure.com/courses/30095/quizzes/86347/take Question 19 5 pts If afm's bond is currently trading at a YTM of 5% and the firm's marginal tax rate is 40%. It's common equity is based on the capital asset pricing model with a risk free rate on a US Treasury yielding 4%, the return on the overall stock market is 11%, and the beta for the firm is 1.20. The long- term financing is provided with 40% debt and 60% equity. What is the firm's weighted average cost of capital? HTML Editore B /VAATE 1XXE Question 20 What is the company's degree of total leverage? Exhiblit 9 Current Year Prior Year Sales 175,000 150,000 Less: Cost of Goods Sold 87,500 75,000 Operating Profit (EBIT) 87,500 75,000 Less: Interest 7.000 6,250 Taxable income 80.500 68.750 Less: Taxes 7.483 5.697 Net Income 73,017 63,053 HTML Editore BIVA - A - I E = 3- DO G ODT * 1 11 * 12pt - Paragraph - Question 17 10 pts In a Scenario Analysis, a decision maker may be uncertain of the firm's future WACC. The Scenario Analysis is used for a what if impact of a range of circumstances. Use the table below with a decision maker determining that the WACC may vary over the life of the project by +5% and the future cash flows may vary by +25% from the baseline estimates. What is the best case scenario of the net present value and the worst case scenario of the net present value using the Scenario Analysis for Project B with a WACC of 10%? YEAR PROJECT A PROJECT B 1.100 -2.750 HO 400 725 390 140 Question 18 5 pts In a Sensitivity Analysis, a decision maker may be uncertain of the firm's future WACC. The sensitivity analysis is used to reveal the impact of variance in the WACC. With a baseline estimate of the WACC at 10%, and the assumption that the WACC has increased to 15% in the future, what is the baseline net present value and the new net present value using the sensitivity analysis for Project A? YEAR PROJECT A PROJECT B - 1,100 -2.750 725 725 400 390 380 370 360 800 1,400 deltastate instructure.com/courses/30095/quizzes/86347/take Question 19 5 pts If afm's bond is currently trading at a YTM of 5% and the firm's marginal tax rate is 40%. It's common equity is based on the capital asset pricing model with a risk free rate on a US Treasury yielding 4%, the return on the overall stock market is 11%, and the beta for the firm is 1.20. The long- term financing is provided with 40% debt and 60% equity. What is the firm's weighted average cost of capital? HTML Editore B /VAATE 1XXE Question 20 What is the company's degree of total leverage? Exhiblit 9 Current Year Prior Year Sales 175,000 150,000 Less: Cost of Goods Sold 87,500 75,000 Operating Profit (EBIT) 87,500 75,000 Less: Interest 7.000 6,250 Taxable income 80.500 68.750 Less: Taxes 7.483 5.697 Net Income 73,017 63,053 HTML Editore BIVA - A - I E = 3- DO G ODT * 1 11 * 12pt - Paragraph
