26) Anderson Clayton will purchase a new pellet mill that will replace an older, less efficient mill. The new mill costs $360,000 and shipping costs are $10,000. Improving the steam lines to the new mill will cost an additional $22,000. The old mill has a book value of $25,000 and can be sold for $12,000. The installation of the new mill will cause inventories to increase by $8,000, accounts receivable will go up $20,000, and accounts payable will increase $10,000. If Anderson Clayton has a marginal tax rate of 40%, what is the NINV for the new mill? a.$412,800 b.$392,800 . c.$374,800 d.$398,000 27) According to Value Line, Bestway has a beta of 1.15. If 3-month Treasury bills currently yield 7.9% and the market risk premium is estimated to be 8.3%, what is Bestway's cost of equity capital? a.16.2% b.8.36% c.17.45% . d.9.55% 28) Determine the pure project beta of a project that has 30% debt and 70% equity. The beta for the company is 1.4, and it has a tax rate of 40%. a.1.05 b.1.56 c.1.83 d.1.11 29) firm is determining its cost of common stock equity. It last paid a dividend of $0.52, the dividends are growing at 5%, flotation costs are $2 per share, and the firm will net $72 per share upon the sale of the stock. What is the firm’s cost of common equity? a.5.76% . b.8.22% c.6.11% d.3.49% 30) annuity due is one in which ___. a.payments or receipts occur forever b.payments or receipts occur at the end of each period c.payments or receipts occur at the beginning of each period . d.cash flows occur continuously
MCQ'S:
26) Anderson Clayton will purchase a new pellet mill that will replace an older, less efficient mill. The new mill costs $360,000 and shipping costs are $10,000. Improving the steam lines to the new mill will cost an additional $22,000. The old mill has a book value of $25,000 and can be sold for $12,000. The installation of the new mill will cause inventories to increase by $8,000, accounts receivable will go up $20,000, and accounts payable will increase $10,000. If Anderson Clayton has a marginal tax rate of 40%, what is the NINV for the new mill?
a.$412,800
b.$392,800 .
c.$374,800
d.$398,000
27) According to Value Line, Bestway has a beta of 1.15. If 3-month Treasury bills currently yield 7.9% and the market risk premium is estimated to be 8.3%, what is Bestway's
a.16.2%
b.8.36%
c.17.45% .
d.9.55%
28) Determine the pure project beta of a project that has 30% debt and 70% equity. The beta for the company is 1.4, and it has a tax rate of 40%.
a.1.05
b.1.56
c.1.83
d.1.11
29) firm is determining its cost of common stock equity. It last paid a dividend of $0.52, the dividends are growing at 5%, flotation costs are $2 per share, and the firm will net $72 per share upon the sale of the stock. What is the firm’s cost of common equity?
a.5.76% .
b.8.22%
c.6.11%
d.3.49%
30)
a.payments or receipts occur forever
b.payments or receipts occur at the end of each period
c.payments or receipts occur at the beginning of each period .
d.cash flows occur continuously
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