QUESTION 2 Scoby Jones wants to become an accountant. He invests $45,000 to attend a 5th year of college and switch from being a finance major to an accounting major. Once he begins working, he will be able to earn $10,000 more per year in his first 2 years and then $20,000 more per year for the next 3 years than he would have with a finance degree. After that, he will be so fed up with the job he will quit. His current WACC is 11%. What is the NPV of this investment? O A. None of these O B. $4,480.79 O C. $10,624.06 O D. $35,000.00 O E. $11,792.71 QUESTION 3 Unmeatable, a vegetarian meat substitute making company, has always paid out its earnings as dividends, hence the firm has no retained earnings. This same situation is expected to persist in the future. The company uses the CAPM to calculate its cost of equity, its target capital structure consists of common stock, preferred stock, and debt. Which of the following events would DECREASE its WACC? O A. The market risk premium declines. O B. None of the above. O C.Unmeatable decides to grow its main business line. OD.Unmeatable decides to begin work on a new highly risky project. O E. The company's beta increases. QUESTION 4 Which of the following statements CORRECT? A. Depreciation reduces a firm's cash balance, so an increase in depreciation would normally lead to a reduction in the firm's cash flow. O B. Operating income is revenue minus costs, depreciation, and interest expenses. O C. Operating income derived from the firm's regular core business. O D. People sometimes talk about the firm's cash flow, which is shown as the lowest entry on the income statement, hence it is often called "the bottom line." O E. The more depreciation a firm reports, the higher its tax bill, other things held constant