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Which one of the following statements weakens the role of NPV as a sole criteria for selecting a project?

a.

Monte Carlo simulations make traditional appraisal criteria redundant.

b.

Growing pressure from shareholders and other stakeholders around issues involving strategy, risk, and uncertainty, has highlighted the importance of sustainability in capital investment decision making.

c.

The payback method seems to be an enduring technique still used by many organizations.

d.

None of the above.

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Income		Assets
Sales	$550	Net working capital	$180
Cost of goods sold	275	Fixed assets	1500
Selling, general and admin expenses	75	Depreciation	360
EBT	$200
Tax (20%)	$40.0	Other assets	110
Net Income	$160

Assuming the cost of capital is 10%, determine the economic profit.

a.

$50

b.

$14

c.

$17

d.

Can not be determined

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Other things held constant, if a bond indenture contains a call provision, the yield to maturity that would exist without such a call provision will generally be ____ the YTM with it.

a.

The same as

b.

Lower than

c.

Higher than

d.

Either higher or lower, depending on the level of call premium, than

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Which ONE of the following presents a rationale exposition of value thinking that links performance target with firm value?

a.

Cutting the indirect labor cost will increase sales volume, which will affect margin vis--vis return on equity.

b.

None of the other options.

c.

Delayed response to customer complaints increases the cost of goods sold and reduces margin vis--vis firm value.

d.

Optimization of order size will reduce the cost of managing inventory that will affect capital turnover, and eventually firms' return on equity vis--vis firm value.

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Assume the issuer incurs $0.5 million in other expenses to sell 3 million shares at $50 each to an underwriter. The underwriter sells the shares at $53 each. By the end of the first days trading, the issuing companys stock price had risen to $75. What is the total cost of underpricing?

a.

$75 million

b.

$66

c.

$66 million

d.

Can not be determined