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##### . The net present value always provides the correc...

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. The net present value always provides the correct decision provided that ____________ (Points : 1) Cash flow are constant over the asset?s life The required rate of return is greater than the internal rate of return Capital rationing is not imposed The internal rate of return is positive 2. The capital budgeting manager for XYZ Corporation, a very profitable high technology company, completed her analysis of Project A assuming 5 year depreciation. He accountant reviews the analysis and change the depreciation method to 3 year depreciation. This change will, ________ (Points : 1) Increase the present value of the net cash flow Decrease the present value of the net cash flow Have no effect on the net cash flow because depreciation is a non cash expense Only change the net cash flows if the useful life of the depreciable asset is greater than five years. 3. Your company is considering a replacement of an old delivery van with a new one that is more efficient. The old van cost \$30,000 when it was purchased 5 years ago. The old van is being depreciated using the simplified straight line method over a useful life of 10 years. The old van could be sold today for \$5,000. The new van has an invoice price of \$75,000, and it will cost \$5,000 to modify the van to carry the company?s products. Cost savings from use of the new van are expected to be \$ 22,000 per year for 5 years. At which time the van will be sold for its estimated salvage value of \$15,000. The new van will be depreciated using the simplified straight line method over its 5 year useful life. The company?s statutory rate is 35%. Working capital is expected to increase by \$3,000 at the inception of the project, but this amount will be recaptured at the end of year five. What is the tax effect of selling the old machine? (Points : 1) A savings of \$1,750 A savings of \$3,500 Additional taxes paid of \$1,750 A tax savings of \$1,200 4. Zellar?s, Inc. Is considering two mutually exclusive projects, A and B. Project A costs \$ 75,000 and is expected to generate \$48,000 in year one and \$45,000 in year two. Project B costs \$80,000 and is expected to generate \$34,000 on year one, \$37,000 in year two, \$26,000 in year three, and \$25,000 in year four. Zellar, Inc.?s required rate of return for these projects is 10%. The internal rate of return for Project B is ________ (Points : 1) 26.74% 20.79% 18.64% 16.77% 5. Zellar?s, Inc. Is considering two mutually exclusive projects, A and B. Project A costs \$ 75,000 and is expected to generate \$48,000 in year one and \$45,000 in year two. Project B costs \$80,000 and is expected to generate \$34,000 on year one, \$37,000 in year two, \$26,000 in year three, and \$25,000 in year four. Zellar, Inc.?s required rate of return for these projects is 10%. The profitability index for Project B is ________ (Points : 1) 1.56 1.41 1.29 1.23 6. A capital budgeting project has a net present value of \$10,000 and a modified internal rate of return of 13%. The project's required rate of return is 11 %. The internal rate of return is ______ (Points : 1) Greater than 13 % Less than 11 % Between 11% and 13% Less than \$10,000 7. Nickel Industries is considering the purchase of a new machine that will cost \$178,000, plus an additional \$12,000 to ship and install. The new machine will have a 5 year useful life and will be depreciated using the straight line method. The machine is expected to generate new sales of \$85,000 per year and is expected to increase operating costs by \$ 10,000 annually. Nickel?s income tax rate is 40%. What is the projected incremental cash flow of the machine or year 1? (Points : 1) \$54,800 \$60,200 \$66,350 \$68,200 8. Jones Company has a target capital structure of 40% debt, 10% preferred stock, and 50% common equity. The company?s after tax cost of debt is 8%, its cost of preferred debt is 10%, its cost of retained earnings is 14%, and its cost of new common stock is 16%. The company stock has a beta of 1.2 and the company?s marginal tax rate is 35%. What is the company?s weighted average cost of capital if retained earnings are used to fund the common equity portion? (Points : 1) 11.20% 6.72% 16.80% 8.00% 9. Your company is considering a replacement of an old delivery van with a new one that is more efficient. The old van cost \$30,000 when it was purchased 5 years ago. The old van is being depreciated using the simplified straight line method over a useful life of 10 years. The old van could be sold today for \$5,000. The new van has an invoice price of \$75,000, and it will cost \$5,000 to modify the van to carry the company?s products. Cost savings from use of the new van are expected to be \$ 22,000 per year for 5 years. At which time the van will be sold for its estimated salvage value of \$15,000. The new van will be depreciated using the simplified straight line method over its 5 year useful life. The company?s statutory rate is 35%. Working capital is expected to increase by \$3,000 at the inception of the project, but this amount will be recaptured at the end of year five. What is the incremental free cash flow for year one? (Points : 1) \$18,850 \$19,900 \$21,305 \$22,250 10. Clinton Company is financed 40 percent by equity and 60 percent by debt. If the firm expects to earn \$20 million in net income and retain 40% of it, how large can the capital budget be before common stock must be sold? (Points : 1) \$8.0 million \$12.0 million \$20.0 million \$50.0 million,Tutor, thank you so much for this. I am desperate because this is due today. Do you also do assignments from the Finance book? How do I send it to you? I am desperate for a completion of an assignment.,Rachel, I need help with 3 other assignments for the rest of the class, next week and this week. Can you help me? How will I send the assignments to you? Will you have the right book in Finance?,I will not continue to bother you but the sooner the better for this quiz is good but I do have an assignment for you to submit today as well. How can you know what is needed? Will you need the authors names, book title, etc? I am desperate.,Thank you for your help. What is your major? I need help with some assignments and one is due tomorrow. Can you help me at all? I have attached the file. Can you help me with this and how much? I need it ASAP.

Paper#1896 | Written in 18-Jul-2015

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