Spirulina-Chips Inc. is an unlevered firm, which is planning to build a new plant to produce affordable and highly nutritive chips. The new plant has a cost of $200 million and is expected to generate annual unlevered after tax cash flows of $15 million in perpetuity. Spirulina-Chips has a cost of equity of 12 percent and corporate tax rate of 25%. If the plant is financed with equity then the net present value of the project is ________.

Select one:

a. -$75 million

b. $125 million

c. - $33.333 million

d. - $106.25 million

e. -$25 million

A manager publicly declares that a previously announced merger between his company Firenze Inc. and another competitor no longer will be carried out. Immediately after this new announcement Firenze's stock price increases by 10%. This is evidence _________

Select one:

a. of good financing decisions.

b. All of the THESE are correct.

c. of the weak-form of market efficiency.

d. that the previously announced merger reflected a negative net present value for Firenze Inc.

A manager publicly declares that a previously announced merger between his company Firenze Inc. and another competitor no longer will be carried out. Immediately after this new announcement Firenze's stock price increases by 10%. This is evidence _________

Select one:

a. of good financing decisions.

b. All of the THESE are correct.

c. of the weak-form of market efficiency.

d. that the previously announced merger reflected a negative net present value for Firenze Inc.

The CEOs annual bonus of Atlas Corp. is as follows:

(Base Salary) x (Atlas excess return on the industry index) x (5). The CEOs base salary is $1 million. The return on the industry index is based on the CAPM.

During 2019, the risk free rate was 2% and the market risk premium 6%. The beta of Atlas and the industry is the same as the overall stock market. Atlas does not pay dividends.

If Atlas stock price at the beginning of 2019 was $50 and increased to $55 at the end of the year, then the CEOs bonus during 2019 was __________ .

Select one:

a. $20,000

b. $100,000

c. $0

d. $200,000

e. $500,000