Question 19 Pinks Co. is considering a project with an initial cost of $5 million. The project will produce cash inflows of $2 million a year for five years. The firm has a weighted average cost of capital of 13%. Assume that the project has an average risk level as the whole firm. What is the net present value of the project? O $3.26 million O $4.48 million O $1.58 million O $2.03 million. Question 20 Daffodil Inc. has a cost of equity of 16 percent and an after-tax cost of debt of 4 percent. The firm's weighted average cost of capital is 13.6 percent. What is the firm's debt-equity ratio (D/E)? O 0.33 O 0.50 O 0.25 0.40

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Question 19
Pinks Co. is considering a project with an initial cost of $5 million. The project will produce cash
inflows of $2 million a year for five years. The firm has a weighted average cost of capital of 13%.
Assume that the project has an average risk level as the whole firm. What is the net present value of
the project?
O $3.26 million
O $4.48 million
O $1.58 million
O $2.03 million
Question 20
Daffodil Inc. has a cost of equity of 16 percent and an after-tax cost of debt of 4 percent. The firm's
weighted average cost of capital is 13.6 percent. What is the firm's debt-equity ratio (D/E)?
0.33
O 0.50
0.25
0.40
Transcribed Image Text:Question 19 Pinks Co. is considering a project with an initial cost of $5 million. The project will produce cash inflows of $2 million a year for five years. The firm has a weighted average cost of capital of 13%. Assume that the project has an average risk level as the whole firm. What is the net present value of the project? O $3.26 million O $4.48 million O $1.58 million O $2.03 million Question 20 Daffodil Inc. has a cost of equity of 16 percent and an after-tax cost of debt of 4 percent. The firm's weighted average cost of capital is 13.6 percent. What is the firm's debt-equity ratio (D/E)? 0.33 O 0.50 0.25 0.40
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