$40.00 $28.00
sunk costs should be included |
net present value method |
have a PI equal to zero. |
$1,085.25 |
5.81 years |
is a valuable option. |
contingency planning. |
The net present value of the project is approximately $1,011 |
$12,000 |
$82,000 |
is diversifiable |
the expected return is usually the same as the actual return |
7.33 percent |
17.68 percent |
.46 |
only the most talented analysts can determine the true value of a security. |
between 4.5% and 8% |
$103.68 |
It is the return that the firm’s creditors demand on new borrowing. |
it is relevant to the WACC |
less than 5% |
the WACC can be used as the required return for all new projects. |
5.98% |
a petition is filed in federal court |
The cost of capital should consider the flotation costs. |
Goods are sold cash |
There is an opportunity cost associated with not offering credit. |
electric utility company |
$567 |
Because by maximizing the current stock value, you also maximize the company’s profit for the year. |
I and II |
Book values reflect the value of the asset based on generally-accepted accounting principles. |
33% |
Regional Bank, APR |
a decrease in the interest rate |
$12,468.07 |
$91.05 |
interest-only |
$1080 |
primary |
Financial leverage increases profits and decreases losses. |
10.5% |
Most bonds do not carry default risk. |
zero-coupon, five year |
paying interest payments on a semi-annual basis. |