FIN 370 help A Clearer path to student success/uophelp.com FIN 370 help A Clearer path to student success/uop | Page 13

shares of common stock outstanding. The preferred stock sells for $64 a
share. The common stock has a beta of 1.21 and sells for $44 a share.
The U.S. Treasury bill is yielding 2.3 percent and the return on the
market is 11.2 percent. The corporate tax rate is 34 percent. What is the
firm’s weighted average cost of capital?
11.56 percent
11.30 percent
11.18 percent
10.64 percent
9.69 percent
Andy deposited $3,000 this morning into an account that pays 5 percent
interest, compounded annually. Barb also deposited $3,000 this morning
into an account that pays 5 percent interest, compounded annually. Andy
will withdraw his interest earnings and spend it as soo n as possible. Barb
will reinvest her interest earnings into her account. Given this, which
one of the following statements is true?
Barb will earn more interest the second year than Andy.
Barb will earn more interest the first year than Andy will.
Andy will earn compound interest.
Andy will earn more interest in year three than Barb will.
After five years, Andy and Barb will both have earned the same amount
of interest.
When utilizing the percentage of sales approach, managers:
1. Estimate company sales based on a desired level of net income and
the current profit margin.
2. Consider only those assets that vary directly with sales.
III. Consider the current production capacity level.
1. Can project both net income and net cash flows.
III and IV only
I, III, and IV only
II and III only
II, III, and IV only