Question 61

The market value of a firm that invests in projects providing a return equal to its WACC should decrease over time.

Select one:

True

False

Question 62

A firm has $500 in debt at a cost of 7%, a 34% tax rate, a total firm value of $1.000, and an unlevered return of 11.5%. What is the WACC?

Select one:

a. 11.84%

b. 10.57%

c. 9.72%

d. 9.55%

e. 11.41%

Question 63

An increase in the corporate tax rate decreases the value of the depreciation tax shield, all else equal.

Select one:

True

False

Question 64

If a firm uses cash to purchase inventory, its quick ratio will remain unchanged.

Select one:

True

False

Question 65

For a project with an initial investment of $38,000 and cash inflows of $10,500 a year for five years, calculate NPV given a required return of 10%/year.

Select one:

a. $655

b. -$1,205

c. $1,803

d. $888

e. $1,103