Question: A firm class A common share are currently trading for 13.70$ on the Toronto Stock Exchange. The risk free rate prevailing the market is currently 5%. The expected return of the market portfolio is 11%. the firm has a beta of 1.6 and is expected to pay a dividend of 2$ per year forever. Under theses conditions and assuming CAPM holds, the firms common share are currently.

A) undervalued

B) overvalued

C) strongly valued

D) weakly valued

E) fairly valued

Question: Which of the following cash flows are relevants incremental cash flow for a project that you are currently considering investing in?

A) Drop in sales because your competitors launched a new product cannibalizing on your sales

B) Interest payments on debt used to finance the project

C) The cost of marketing survey you conducted to determine demand for the proposed project

D) the tax saving brought about by the projects depreciation expense

E) Research and development expenditures you have made