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ACC - Misc. Problems

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Question;16) Kip owns the following portfolio of securities. What is the beta for the portfolio?16) ______A) 1.98 B) 1.00 C) 1.50 D) 1.7417) George is considering an investment in Vandelay Inc. and has gathered the information in the following table. What is the expected standard deviation for a share of the firm's stock?17) ______A) 31.62% B) 22.48 C) 17.46% D) 27.54%18) Alice purchased Hampton Industries Inc. stock for $14.65 and sold it 6 months later for $17.38 after receiving a $0.25 dividend.?CompanyBeta?Percent of PortfolioApple.8250%Ford2.5330%Federal Express1.6720%?State of the EconomyProbability of the StateConditional Expected Return Vandelay Inc.?Recession.25-20%?Steady.6010%Boom.15?35%What was Alice's holding period return (HPR), Annual Percentage Rate (APR), and Effective Annual Rate (EAR)? 18) ______A) 20.34%, 40.68%, 44.82% B) 18.63%, 37.27%, 40.74% C) 17.15%, 34.29%, 37.23% D) 20.34%, 40.68%, 9.70%19) Acme, Inc. is considering a four-year project that has an initial outlay or cost of $100,000. The respective future cash inflows from its project for years 1, 2, 3 and 4 are: $50,000, $40,000, $30,000 and $20,000. Will it accept the project if its payback period is 31 months? 19) ______A) No, because it pays back in over 31 months. B) Yes, because it pays back in 25 months.C) No, because it pays back in over 35 months. D) Yes, because it pays back in 28 months.20) Morgan, Inc. is considering an eight-year project that has an initial after-tax outlay or after-tax cost of $180,000. The future after-tax cash inflows from its project for years 1 through 8 are the same at $35,000. Morgan uses the net present value method and has a discount rate of 12%. Will Morgan accept the project? 20) ______A) Morgan rejects the project because the NPV is below -$7,000. B) Morgan rejects the project because the NPV is about -$6,133. C) Morgan accepts the project because the NPV is about $6,141. D) Morgan accepts the project because the NPV is over $10,000.21) Consider the following four-year project. The initial outlay or cost is $180,000. The respective cash inflows for years 1, 2, 3 and 4 are: $100,000, $80,000, $80,000 and $20,000. What is the discounted payback period if the discount rate is 11%? 21) ______A) About 1.667 years B) About 2.427 years C) About 2.000 years D) About 2.135 years22) Lennon, Inc. is considering a five-year project that has an initial outlay or cost of $80,000. The respective future cash inflows from its project for years 1, 2, 3, 4 and 5 are: $15,000, $25,000, $35,000, $45,000, and $55,000. Lennon uses the internal rate of return method to evaluate projects. What is Lennon's IRR? 22) ______A) The IRR is less than 22.50%. B) The IRR is about 26.16%. C) The IRR is about 24.16%. D) The IRR is over 26.50%.23) Mulligan, Inc. is currently considering an eight-year project that has an initial outlay or cost of $140,000. The cash inflows from its project for years 1 through 8 are the same at $35,000. Mulligan has a discount rate of 12%. Because there is a shortage of funds to finance all good projects, Mulligan wants to compute the profitability index (PI) for each project. That way Mulligan can get an idea as to which project might be a better choice. What is the PI for Mulligan's current project? 23) ______A) About 1.21 B) About 1.09 C) About 1.24 D) About 1.1924) Dweller, Inc. is considering a four-year project that has an initial after-tax outlay or after-tax cost of $80,000. The future cash inflows from its project are $40,000, $40,000, $30,000 and $30,000 for years 1, 2, 3 and 4, respectively. Dweller uses the net present value method and has a discount rate of 12%. Will Dweller accept the project? 24) ______A) Dweller rejects the project because the NPV is -$3,021.B) Dweller accepts the project because the NPV is greater than $28,000. C) Dweller accepts the project because the NPV is greater than $30,000. D) Dweller rejects the project because the NPV is less than -$4,000.25) Bacon Signs Inc., purchases a machine for $70,000. This machine qualifies as a five-year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1 = 20.00%, year 2 = 32.00%, year 3 = 19.20%, year 4 = 11.52%, etc. The firm has a tax rate of 40%. If the machine is sold at the end of two years for $50,000, what is the cash flow from disposal? 25) ______A) $39,875 B) $33,600 C) $43,440 D) $50,000

 

Paper#42691 | Written in 18-Jul-2015

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