11) A project has an expected net present value of $50,000 with a standard deviation of the net present value of $20,000. Assume that NPV is normally distributed. What is the probability that the project will have a negative NPV? a.34.5% b.0.62% c.49.38% d.99.38%
MCQ'S
11) A project has an expected
a.34.5%
b.0.62%
c.49.38%
d.99.38%
12) The Percolator Company has the following capital structure:
Common stock ($5 par, 250,000 shares)
$1,250,000
Contributed capital in excess of par
$5,000,000
$4,000,000
The company declares a 10% stock dividend. The pre-stock dividend market price of the company's stock is $50. Determine the balance in the retained earnings account after the stock dividend.
a.$1,375,000
b.$1,250,000
c.$4,000,000
d.$2,750,000
13) All of the following are methods of adjusting a project for total risk EXCEPT ___.
a.the certainty equivalent approach
b.sensitivity analysis
c.the carpe diem approach
d.simulation analysis
14) IKON is financed entirely with equity, and its beta is 1.31. If the current risk-free rate is 6.25% and the expected market return is 12.8%, what is IKON's required
a.14.83%
b.17.65%
c.8.58%
d.12.81%
15) simulation analysis for a new acquisition has indicated that the expected NPV is $50 million with a standard deviation of $40 million. Assume that NPV is normally distributed. What is the probability that the project will be unacceptable?
a.89.44%
b.21.19%
c.10.56%
d.39.44%
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