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FIN 571 Week 5 quiz needed




Question;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?;4.;What might cause a firm to face capital;rationing?;5.;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?;6.;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?;7.;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.;8.;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?;9.;Which type of project do financial managers;typically use the highest cost of capital when evaluating?


Paper#51285 | Written in 18-Jul-2015

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