Suppose an investment is equally likely to have a 42.7% return or a -20% return. The total volatility of returns is closest to: Select one: a. 44.34% b. 31.35% c. 9.83% d. 22.17%

Wyatt Oil has assets with a market value of $600 million, $79 million of which are cash. It has debt of $250 million, and 20 million shares outstanding. Assume perfect capital markets. If Wyatt Oil distributes the $79 million as a dividend, then its stock price after the dividend will be closest to: Select one: a. $13.55 b. $26.05 c. $12.50 d. $17.50

Consider a project with free cash flows in one year of $90 000 in a weak economy or $117 000 in a strong economy, with each outcome being equally likely. The initial investment required for the project is $40 000, and the project's cost of capital is 13.3%. The risk-free interest rate is 5%. Suppose that to raise the funds for the initial investment the firm borrows $20 000 at the risk-free rate and issues new equity to cover the remainder. In this situation, the value of the firm's levered equity from the project is closest to: Select one: a. $91350 b. $51350 c. $71350 d. $83500