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7. A company has the following financial information: To
maximize shareholder wealth, the company should accept projects
with returns greater than what percent?
8. The measurement of the benefit lost by using resources for one
purpose and not another is
9. Which of the following statements is correct regarding the
weighted-average cost of capital (WACC)?
10. Carter Co. paid $1,000,000 for land three years ago. Carter
estimates it can sell the land for $1,200,000, net of selling costs. If
the land is not sold, Carter plans to develop the land at a cost of
$1,500,000. Carter estimates net cash flow from the development in
the first year of operations would be $500,000. What is Carter's
opportunity cost of the development?
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