11. A company with a combined federal and state tax rate of 30% has
the following capital structure:What is the weighted-average after-tax
cost of capital for this company?
12. Which of the following is assigned to goods that were either
purchased or manufactured for resale?
13. Management at MDK Corp. is deciding whether to replace a
delivery van. A new delivery van costing $40,000 can be purchased to
replace the existing delivery van, which cost the company $30,000 and
has accumulated depreciation of $20,000. An employee of MDK has
offered $12,000 for the old delivery van. Ignoring income taxes, which
of the following correctly states relevant costs when making the
decision whether to replace the delivery vehicle?
14. Alpha Corporation has the following capital structure and related
cost of capital for each source: Which one of the following is Alpha's
weighted average cost of capital?
15. A company uses its company-wide cost of capital to evaluate new
capital investments. What is the implication of this policy when the
company has multiple operating divisions, each having unique risk
attributes and capital costs?
16. Which one of the following costs, if any, is relevant in making
financial decisions?
17. Buff Co. is considering replacing an old machine with a new
machine. Which of the following items is economically relevant to
Buff's decision? (Ignore income tax considerations.)
18. The ABC Company is trying to decide between keeping an existing
machine and replacing it with a new machine. The old machine was
purchased just two years ago for $50,000 and had an expected life of
10 years. It now costs $1,000 a month for maintenance and repairs,
due to a mechanical problem. A new replacement machine is being