FIN 571 Week 1 Connect Problems( Math and Accounting Review)
35. When computing WACC, you should use the: 36. The cost of preferred stock: 37. No matter how many forms of investment analysis you employ: 38. Which statement concerning the net present value( NPV) of an investment or a financing project is correct? 39. The net present value method of capital budgeting analysis does all of the following except: 40. Graham and Harvey( 2001) found that _____ were the two most popular capital budgeting methods. 41. The primary reason that company projects with positive net present values are considered acceptable is that: 42. What is the net present value of a project with an initial cost of $ 36,900 and cash inflows of $ 13,400, $ 21,600, and $ 10,000 for Years 1 to 3, respectively? The discount rate is 13 percent. 43. Flatte Restaurant is considering the purchase of a $ 10,800 soufflé maker. The soufflé maker has an economic life of five years and will be fully depreciated by the straight-line method. The machine will produce 2,400 soufflés per year, with each costing $ 2.80 to make and priced at $ 5.65. Assume that the discount rate is 16 percent and the tax rate is 35 percent. What is the NPV of the project? Should the company make the purchase? 44. A project costing $ 6,200 initially should produce cash inflows of $ 2,860 a year for three years. After the three years, the project will be shut down and will be sold at the end of Year 4 for an estimated net cash amount of $ 3,300. What is the net present value of this project if the required rate of return is 11.3 percent? 45. Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $ 2.73 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which it will be worthless. The project is estimated to generate $ 2,090,000 in annual sales, with costs of $ 785,000. The tax rate is 30 percent and the required return is 13 percent. What is the project’ s NPV?
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FIN 571 Week 1 Connect Problems( Math and Accounting Review)
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