1. Should a project be accepted if it offers an annual after-tax cash flow of $1,250,00 indefinitely, costs $10million, is safer that the firms average projects, and the firm uses a 12.5% WACC?
2. Yes, since NVP is positive
3. Yes, since NPV is zero
4. No, since NPV is zero
5. No, since NPV is negative

1. Company XYZs debt-to equity ratio of 1/3. If the WACC is 21.32%, and the pretax cost of debt is 11%, what is the cost of common equity assuming a tax rate of 34%?

1. 26%
2. 20%
3. 22%
4. 24%

1. A new town instrument is analyzing a proposed project. The company expects to sell 2,100 units, + or -4 percent. The expected variable cost per unit is $270 and the expected fixed costs are $548,000. Cost estimates are considered accurate within a plus or minus 3 percent range; the depreciation expense is $118,000. The sales price is estimated at $789 per unit, plus or minus 5 percent. What is the pre-tax profit under the best case scenario?

1. $1,511,092.80
2. $677,545.2
3. $689,345.2
4. 1,809,334.80

2. A company expects to sell 2,340 units, give or take 5 percent. The expected variable cost per unit is $260 and the expected fixed costs are $589,000. Cost estimates are considered accurate within a plus or minus 4 percent range. The depreciation expense is $129,000. The sales price is estimated at $750 per unit give or take 2 percent. What is the cash flow from operation under the best-case scenario?

1. 443,139
2. 476,404
3. 472,139
4. 424,804