FIN 571 Week 4 DQ 1 FOR MORE CLASSES VISIT www. fin571tutor. com
A firm uses a single discount rate to compute the NPV of all its potential capital budgeting projects, even though the projects have a wide range of nondiversifiable risk. The firm then undertakes all those projects that appear to have positive NPVs. Briefly explain why such a firm would tend to become riskier over time.
===================================================================================== FIN 571 Week 4 DQ 2 FOR MORE CLASSES VISIT www. fin571tutor. com
Phyllis believes that the firm should use straight-line depreciation for a capital project because it results in higher net income during the early years of the project’ s life. Joanna
c. Which are more relevant? 13. Titan Mining Corporation has 8.9 million shares of common stock outstanding and 330,000 5 percentsemiannual bonds outstanding, par value $ 1,000 each. The common stock currently sells for $ 37 per share and has a beta of 1.45, and the bonds have 15 years to maturity and sell for 118 percent of par. The market risk premium is 7.7 percent, T-bills are yielding 4 percent, and the company’ s tax rate is 40 percent.
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FIN 571 Week 4 DQ 1 FOR MORE CLASSES VISIT www. fin571tutor. com
A firm uses a single discount rate to compute the NPV of all its potential capital budgeting projects, even though the projects have a wide range of nondiversifiable risk. The firm then undertakes all those projects that appear to have positive NPVs. Briefly explain why such a firm would tend to become riskier over time.
===================================================================================== FIN 571 Week 4 DQ 2 FOR MORE CLASSES VISIT www. fin571tutor. com
Phyllis believes that the firm should use straight-line depreciation for a capital project because it results in higher net income during the early years of the project’ s life. Joanna