Assume that you are 30 years old today, and that you are planning on retiring at age 65. Your ...

Assume that you are 30 years old today, and that you are planning on retiring at age 65. Your current salary is $45,000 and you expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you

Fannie Mae and Freddie Mac both A) sell bonds to investors and use the funds to purchase mortgages. B) help regulate the banking system. C) directly lend funds to people seeking mortgages. D) reduce access to funds for mortgages b

Find the amount of each payment to be made into a sinking fund which earns

Find the amount of each payment to be made into a sinking fund which earns 7% compounded quarterly and produces $34,000 at the end of 3.5 years. Payments are made at the end of each period. The payment size is $?

Dolan Corporation has Gross Profit of $2.3 million, cost of sales of $1.7 million, operating ...

Dolan Corporation has Gross Profit of $2.3 million, cost of sales of $1.7 million, operating expenses of $0.8 million, and "other" income of $0.5 million. What is its EBIT? A) $2 million B) $0.3 million C) $1 million

Allison expects her monthly cash inflow after taxes to be $3,000.

Allison expects her monthly cash inflow after taxes to be $3,000. She also has the following monthly expenses: Rent, $750; student loan payment, $200; utilities, $150; food, $300; recreation, $600; car expenses, $200; clothing, $150. What is Allison&

A commitment on the project requires an initial outlay of $10 000.00 and a further outlay of $5000.00 after one year. Net returns are $5 000.00 per year for five years.

What is the net present value of the project at 16%?

The present value (at age 30) of your retirement savings is closest to:

Assume that you are 30 years old today, and that you are planning on retirement at age 65. Your current salary is $45,000 and you expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on ma

Luther Industries is considering borrowing $500 million to fund a new product line. Given ...

Luther Industries is considering borrowing $500 million to fund a new product line. Given investors' uncertainty regarding its prospects, Luther will pay a 7% interest rate on this loan. The firm's management knows, that the act

Which of the following questions is FALSE? A) With perfect capital markets, all securities are fairly priced and issuing securities is a zero-NPV transaction. B) The fees associated with the financing of the project are independent of the p

Assuming that to fund the investment Taggart will take on $250 million in permanent debt and ...

Assuming that to fund the investment Taggart will take on $250 million in permanent debt and assuming Taggart will incur a 2% (after-tax) underwriting fee on the new debt issue, the NPV of Taggart's new rail line is closest to: A) $195 mill

Which of the following statements is FALSE? A) Rather than set debt according to a target debt-equity ratio or interest coverage level, a firm may adjust its debt according to a fixed schedule that is known in advance. B) When we relax the

Which of the following statements is FALSE? A) In the real world, specific projects should differ only slightly from the average investment made by the firm. B) We can estimate rU for a new project by looking at single-division firms that h

Alpha Beta Corporation maintains a constant debt-equity ratio of 0.5. The total value of the firm ...

Alpha Beta Corporation maintains a constant debt-equity ratio of 0.5. The total value of the firm is $30 million, and existing debt is riskless. Over the next three months, news will come out that will either raise or lower Alpha Beta

Given that Rose issues new debt of $50 million initially to fund the acquisition, the present value ...

Given that Rose issues new debt of $50 million initially to fund the acquisition, the present value of the interest tax shield for this acquisition is closest to: A) $24 million B) $50 million C) $20 million D) $15 million

Based upon the average P/E ratio of the comparable firms, Ideko's target market value of equity is ...

Based upon the average P/E ratio of the comparable firms, Ideko's target market value of equity is closest to: A) $157 million B) $155 million C) $193 million D) $165 million

If Wyatt adjusts its debt once per year to maintain a constant debt-equity ratio of 50%, then the ...

If Wyatt adjusts its debt once per year to maintain a constant debt-equity ratio of 50%, then the value of this new project is closest to: A) $188 million B) $188.5 million C) $320 million D) $340 million

Dusty Donuts has zero coupon debt with a face value of $10 million due in 3 years, and no other debt ...

Dusty Donuts has zero coupon debt with a face value of $10 million due in 3 years, and no other debt outstanding. The risk-free rate is 4%, but due to default risk the yield to maturity on the debt is 10%. Dusty's believes that in the even

Which of the following questions is FALSE? A) Sometimes management may believe that the securities they are issuing are priced at less than (or more than) their true value. If so, the NPV of the transaction, which is the difference between

Suppose that to fund this new project, Aardvark borrows $120 with the principal to be paid in three ...

Suppose that to fund this new project, Aardvark borrows $120 with the principal to be paid in three equal installments at the end each year. The present value of Aardvark's interest tax shield is closest to: A) $5.15 B) $5.00

If KT expects to maintain a debt to equity ratio for this project of .6 then KT's equity cost of ...

If KT expects to maintain a debt to equity ratio for this project of .6 then KT's equity cost of capital, rE, for this project is closest to: A) 5.0% B) 12% C) 15.0% D) 17.0%

Given that Rose issues new debt of $50 million initially to fund the acquisition, the total value of ...

Given that Rose issues new debt of $50 million initially to fund the acquisition, the total value of this acquisition using the APV method is closest to: A) $100 million B) $120 million C) $124 million D) $115 million

Consider the following equation:rwacc = rE + rD(1 - τc)the term rE in this equation is:

Consider the following equation: rwacc = rE + rD(1 - τc) the term rE in this equation is: A) the after tax required rate of return on debt. B) the required rate of return on debt. C) the required rate of return on

Which of the following statements is FALSE? A) The WACC can be used throughout the firm as the company wide cost of capital for new investments that are of comparable risk to the rest of the firm and that will not alter the firm's debt-equi