Your accountants and financial analysts have gathered the following data. Determine the hurdle rate for use...
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Your accountants and financial analysts have gathered the following data. Determine the hurdle rate for use in the capital budgeting process. The current corporate income tax rate is 30%. Answer in the decimal format (e.g. 10.52% is 0.1052) with 4 decimals. Do NOT use commas in your answer. Capital Structure Debt = 14% Preferred Stock = 5% Common Stock = 37% New Common Stock = remainder Before-tax Cost Debt = 2% Preferred Stock = 6% Common Stock = 11% New Common Stock = 14% Selected Answer: 0 [None Given] Correct Answer: 0.1073 Question 9 What is the net present value of the below project? The relevant cash flows are listed by period. The periodic discount rate is 12%. X Answer in the conventional $X.XX format and express negative numbers with a "-" after the units (e.g. $-21). Do NOT use any commas for large numbers. Period Cash Flow -662 42 486 236 0 1 2 3 Selected Answer: Correct Answer: [None Given] -69.08 ($) 0 out of 1 points Question 10 What is the modified internal rate of return (MIRR) of the below project? X Answer in the decimal format (e.g. 10.52% is 0.1052) with 4 decimals. If the answer is negative, place a leading hyphen "-" to indicate so. Do NOT use commas in your answer. The relevant cash flows are listed by period. The WACC is 8%. The assumed reinvestment rate is 7%. Period Cash Flow -889 137 -347 722 10 1 W|N| 2 13 Selected Answer: Correct Answer: [None Given] -0.0952 0 out of 1 points Question 11 What is the net present value of the below project? The relevant cash flows are listed by period. The periodic discount rate is 13%. X Answer in the conventional $X.XX format and express negative numbers with a "-" after the units (e.g. $-21). Do NOT use any commas for large numbers. Period Cash Flow -235 175 239 312 0 1 2 3 Selected Answer: Correct Answer: [None Given] 323.27 ($) 0 out of 1 points Question 12 0 out of 1 points As the CFO, you have final say on major capital budget decisions. You want to fund a major new project but want more information first. You have your team prepare and present the following information: The periodic discount rate is 14%. Best Case NPV = $1586 Probability = 10% Base Case NPV = $886 Probability = remainder Worst Case NPV = $-2547 Probability = 11% Giving the likelihood of each case, what is the correct risk-adjusted NPV to compare against other investments? Answer in the conventional $X.XX format and express negative numbers with a "-" after the units (e.g. $-21). Do NOT use any commas for large numbers. Selected Answer: Correct Answer: [None Given] 578.37 ($) Question 13 0 out of 1 points As the current CFO, you are responsible for presenting the dividend policy decisions to the Board of Directors at fiscal year end. You are preparing to present to the Board tomorrow at the annual meeting. X You are considering increasing the historically stable dividend, knowing that will decrease future growth potential. Assuming the following information, use the dividend discount model to predict the share price under the new proposal. The required rate of return (RROR) for investors is assumed to be unchanged by the proposal. The rates given are annual and the dividends are paid once per year, just before the annual meeting. Current Dividend = $14 Current RROR = 17% Current Growth = 6% Proposal Dividend increase = $5 Growth decrease = 1.7% (absolute value) What is the dollar change in share price? Answer in the conventional $X.XX format and express negative numbers with a "-" after the units (e.g. $-21). Do NOT use commas in your answer. Selected Answer: [None Given] Correct Answer: 21.13 ($) Question 14 If a barrel of oil is 111.22 USD, how much is a barrel of oil in euros given the below exchange rate information? Do not enter any units, just the number to 2 decimal places (e.g. 88.11). EURUSD: 0.7008 USD per euro Selected Answer: Correct Answer: [None Given] 158.70 0 out of 1 points Question 15 Given the below exchange rate information, find the missing cross rate. Do not enter any units, just the number to 2 decimal places (e.g. 88.11). GBPUSD: 2.3893 United States Dollars per 1 Great British Pound USDJPY: 292.60 Japanese Yen per 1 USD GBPJPY: JPY per 1 GBP How many yen does it take to buy 1 pound? Selected Answer: Correct Answer: [None Given] 699.11 0 out of 1 points Question 16 An investor from the United States bought a security listed on a Brazilian exchange. At the time of purchase, she paid 21952 Reals or the equivalent of $9335 in US dollars (USD). After exactly 1 year, she sold the security for 52% more Reals than the purchase price. But, the Real depreciated against the USD by 16% during that same period. After converting the reals from the sale back to USD, what is the investor's rate of return? Answer in the decimal format (e.g. 10.52% is 0.1052) with 4 decimals. If the answer is negative, place a leading hyphen "-" to indicate so. Do NOT use commas in your answer. Selected Answer: Correct Answer: [None Given] 0.2768 0 out of 1 points Your accountants and financial analysts have gathered the following data. Determine the hurdle rate for use in the capital budgeting process. The current corporate income tax rate is 30%. Answer in the decimal format (e.g. 10.52% is 0.1052) with 4 decimals. Do NOT use commas in your answer. Capital Structure Debt = 14% Preferred Stock = 5% Common Stock = 37% New Common Stock = remainder Before-tax Cost Debt = 2% Preferred Stock = 6% Common Stock = 11% New Common Stock = 14% Selected Answer: 0 [None Given] Correct Answer: 0.1073 Question 9 What is the net present value of the below project? The relevant cash flows are listed by period. The periodic discount rate is 12%. X Answer in the conventional $X.XX format and express negative numbers with a "-" after the units (e.g. $-21). Do NOT use any commas for large numbers. Period Cash Flow -662 42 486 236 0 1 2 3 Selected Answer: Correct Answer: [None Given] -69.08 ($) 0 out of 1 points Question 10 What is the modified internal rate of return (MIRR) of the below project? X Answer in the decimal format (e.g. 10.52% is 0.1052) with 4 decimals. If the answer is negative, place a leading hyphen "-" to indicate so. Do NOT use commas in your answer. The relevant cash flows are listed by period. The WACC is 8%. The assumed reinvestment rate is 7%. Period Cash Flow -889 137 -347 722 10 1 W|N| 2 13 Selected Answer: Correct Answer: [None Given] -0.0952 0 out of 1 points Question 11 What is the net present value of the below project? The relevant cash flows are listed by period. The periodic discount rate is 13%. X Answer in the conventional $X.XX format and express negative numbers with a "-" after the units (e.g. $-21). Do NOT use any commas for large numbers. Period Cash Flow -235 175 239 312 0 1 2 3 Selected Answer: Correct Answer: [None Given] 323.27 ($) 0 out of 1 points Question 12 0 out of 1 points As the CFO, you have final say on major capital budget decisions. You want to fund a major new project but want more information first. You have your team prepare and present the following information: The periodic discount rate is 14%. Best Case NPV = $1586 Probability = 10% Base Case NPV = $886 Probability = remainder Worst Case NPV = $-2547 Probability = 11% Giving the likelihood of each case, what is the correct risk-adjusted NPV to compare against other investments? Answer in the conventional $X.XX format and express negative numbers with a "-" after the units (e.g. $-21). Do NOT use any commas for large numbers. Selected Answer: Correct Answer: [None Given] 578.37 ($) Question 13 0 out of 1 points As the current CFO, you are responsible for presenting the dividend policy decisions to the Board of Directors at fiscal year end. You are preparing to present to the Board tomorrow at the annual meeting. X You are considering increasing the historically stable dividend, knowing that will decrease future growth potential. Assuming the following information, use the dividend discount model to predict the share price under the new proposal. The required rate of return (RROR) for investors is assumed to be unchanged by the proposal. The rates given are annual and the dividends are paid once per year, just before the annual meeting. Current Dividend = $14 Current RROR = 17% Current Growth = 6% Proposal Dividend increase = $5 Growth decrease = 1.7% (absolute value) What is the dollar change in share price? Answer in the conventional $X.XX format and express negative numbers with a "-" after the units (e.g. $-21). Do NOT use commas in your answer. Selected Answer: [None Given] Correct Answer: 21.13 ($) Question 14 If a barrel of oil is 111.22 USD, how much is a barrel of oil in euros given the below exchange rate information? Do not enter any units, just the number to 2 decimal places (e.g. 88.11). EURUSD: 0.7008 USD per euro Selected Answer: Correct Answer: [None Given] 158.70 0 out of 1 points Question 15 Given the below exchange rate information, find the missing cross rate. Do not enter any units, just the number to 2 decimal places (e.g. 88.11). GBPUSD: 2.3893 United States Dollars per 1 Great British Pound USDJPY: 292.60 Japanese Yen per 1 USD GBPJPY: JPY per 1 GBP How many yen does it take to buy 1 pound? Selected Answer: Correct Answer: [None Given] 699.11 0 out of 1 points Question 16 An investor from the United States bought a security listed on a Brazilian exchange. At the time of purchase, she paid 21952 Reals or the equivalent of $9335 in US dollars (USD). After exactly 1 year, she sold the security for 52% more Reals than the purchase price. But, the Real depreciated against the USD by 16% during that same period. After converting the reals from the sale back to USD, what is the investor's rate of return? Answer in the decimal format (e.g. 10.52% is 0.1052) with 4 decimals. If the answer is negative, place a leading hyphen "-" to indicate so. Do NOT use commas in your answer. Selected Answer: Correct Answer: [None Given] 0.2768 0 out of 1 points
Expert Answer:
Answer rating: 100% (QA)
To determine the hurdle rate we need to calculate the weighted average cost of capital WACC based on the capital structure and beforetax cost of each component Given Debt 14 Preferred Stock 5 Common S... View the full answer
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1305637108
6th edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham
Posted Date:
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