Resnick Inc. is considering a project that has the following cash flow data. What is the project's Net Present Value if the cost of capital is 14%

Year 0 1 2 3

Cash flows -$400 $200 $200 $200

		$64
		$116
		$200
		$464

A MLDR common stock has a current market price of $52.25. The most recent dividend just paid is $5. The dividend has an expected growth rate of 6%. What is the required rate of return used by investors to discount the stock's dividents?

		9.6%
		11.5%
		15.6%
		16.1%

A company will be below its Break Point next year. Which values should be used to calculate the Weighted average Cost of Capital?

		rs, re
		rd, rp, rs
		rd, rp, re
		rd, rp, rs, re

The Johncar Corporation bond has a 7.5% coupon and a maturity of 21 years. Its yield to maturity is 6.0%. What is the bond's par value?

		$60.00
		$75.00
		$1,000.00
		cannot be determined from the information provided.

A firm is considering a new project whose risk is greater than the risk of the firm's average project, based on all methods for assessing risk. In evaluating this project, it would be reasonable for management to do which of the following?

		Increase the estimated IRR of the project to reflect its greater risk.
		Increase the cost of capital used to evaluate the project to reflect its higher-than-average risk.
		Increase the estimated NPV of the project to reflect its greater risk
		Reject the project, since its acceptance would increase the firm's risk.

A flotation cost is

		the before tax cost of long-term debt
		the fee paid to an investment bank
		the after tax cost of long-term debt
		the liquidity premium portion of the quoted interest rate.

Which of the following statements is true

		If IRR > 0, then NPV > 0
		If PI < 0, then IRR < 1
		If PI > 1, then IRR > cost of capital
		If NPV = 1, then IRR = to the cost of capital

For corporate bond the provision which allows a bondholder to turn in a bond and receive share of common stock is the

		put feature
		call feature
		trustee
		conversion feature

DDR Enterprises is evaluating the following capital budgeting project

Project Initial Investment CF₁ CF₂ CF₃

------------------------------------------------------------------------------------------------------------

EFG -$1600 $800 $700 $500

What is the project's payback period?

		2.0 years
		2.2 years
		2.3 years
		3.0 years

Cornell Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV?

WACC: 10.00%

Year 0 1 2 3

Cash flows -$825 $450 $460 $470

		$269.77
		$317.37
		$339.59
		$345.94