Chapter 7, Problem 2MC

53. A fixed cash flow in each year for a specified number of years is called as……. a.Annuity b.Compounding c.Reovery Factor d.Discounting

What is the full form of "NYSE"? a.Net uield Security Exchnage b.National Stock Exchange c.Net Asset Value d.New York Stock Exchnage

The method of converting the amount of future cash into an amount of cash and cash equivalents value in present is known as: a.Annuity b.Compounding c.None of these d.Discounting

The risk that arises due to use of debt by the firm causing variability of return for creditors and shareholders is: a.Liquidity Risk b.Call Risk c.Default Risk d.Financial Risk

47. The value of holding period return is always show: a.Greater than 0 b.Less than 0 c.Negative d.Equal to 0

Current yield is equal to What? a.Market yield b.Any of these c.Income yield d.Running Yield

Explain. The financial activities which are performed regularly are known as: a.Recurring Finance b.None of these c.Non-recurring finance functions d.Both a and b

The risk in terms of variability in security’s total return due to some exogenous factors is known as: a.systematic risk b.Unsystematic risk c.None of these d.Non diversifiable risk

The Wildcat Oil Company is trying to decide whether to lease or buy a new computer-assisted drilling system for its oil exploration business. Management has decided that it must use the system to stay competitive; it will provide $3 million in annual pretax cost savings. The system costs $8.9 million and will be depreciated straight-line to zero over five years. Wildcat's tax rate is 21 percent, and the firm can borrow at 7 percent. Lambert Leasing Company is willing to lease the equipment to Wildcat. Lambert's policy is to require its lessees to make payments at the start of the year. Suppose it is estimated that the equipment will I have an aftertax residual value of $900,000 at the end of the lease. What is the maximum lease payment acceptable to Wildcat? Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89. Maximum lease payment