Question 7 of 25 1 Points Which of the following statements is FALSE? i. Bond price is determined by the yield to maturity of the bond. ii. Treasury bonds are generally regarded as risk- free. iii. Zero coupon bonds are sometimes purchased at their face value. iv. Increase in bond prices cause interest rates to fall. O A. I, II and III OB. II, III, IV C. I, ill and iv D. I, II, IV Reset Selection te/FINC_334_101_3914_1202/tool/c27d05d6-aa41-447d-9b3d-97c1d56988b4/jsf/delivery/deliverAssessment Question 22 of 25 1 Points Which of the following is TRUE? i. We can evaluate two projects with different timing of cash flows using the IRR rule. ll. The hurdle rate of the IRR rule is arbitrary (random), W. The payback period is the time until the sum of the present value of future cash flows equals the initial Investment. I. IRR rule ignores distant cash flows while the NPV rule does not. A. I, II, IV B. Iv C. ll & lv D. None of the above Reset Selection Question 2 of 25 1 Points After spending $10,000 on client-development, you have just been offered a big production contract by a new client. The contract will add $200,000 to your revenues for each of the next 3 years and it will cost you $100,000 per year to make the additional product. You will have to use some existing equipment and buy new equipment as well. The existing equipment is fully depreciated, but could be sold for $50,000. If you use it in the project, you think you will still be able to sell it for $10,000 at the end. You will buy new equipment valued at $30,000 and straight-line depreciate it to zero over 3 years. It will be worthless at the end of the project. You will have to immediately increase your inventory from $20,000 to $30,000. It will return to $20,000 at the end of the project. Your company's tax rate is 35% and your discount rate is 15%. First, answer the questions below to determine the incremental cash flows. What is the change in cash flow from the opportunity cost of the existing equipment in year 0? A. $50,000 B. $0 C. S-32,500 D. $32,500