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FIN 571 Week 5 Quiz




Question;FIN 571 Week 5 Quiz;1.;Genaro needs to capture a return of 40 percent for his one-year investment in a;property. He believes that he can sell the property at the end of the year for;$150,000 and that the property will provide him with rental income of $25,000.;What is the maximum amount that Genaro should be willing to pay for the;property?;2.;The process of identifying the bundle of projects that creates the greatest;total value and allocating the available capital to the projects is known as;3.;You are considering a project that has an initial cost of $1,200,000. If you;take the project, it will produce net cash flows of $300,000 per year for the;next six years. If the appropriate discount rate for the project is 10 percent;what is the profitability index of the project?;3.;What might cause a firm to face capital rationing?;4.;The WACC for a firm is 19.75 percent. You know that the firm is financed with;$75 million of equity and $25 million of debt. The cost of debt capital is 7;percent. What is the cost of equity for the firm?;5. Bellamee, Inc., has semiannual bonds outstanding with;five years to maturity and are priced at $920.87. If the bonds have a coupon;rate of 7 percent, then what is the YTM for the bonds?;6.;Beckham Corporation has semiannual bonds outstanding with 13 years to maturity;and are currently priced at $746.16. If the bonds have a coupon rate of 8.5;percent, then what is the after-tax cost of debt for Beckham if its marginal;tax rate is 35%? Assume that your calculation is made as on Wall Street.;7.;RadicalVenOil, Inc., has a cost of equity capital equal to 22.8 percent. If the;risk-free rate of return is 10 percent and the expected return on the market is;18 percent, then what is the firm's beta if the firm's marginal tax rate is 35;percent?;8. Which type of project;do financial managers typically use the highest cost of capital when;evaluating?


Paper#47597 | Written in 18-Jul-2015

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