2. Question 7

   1.5 Points

   A company is considering a project costing $200,000. The hurdle rate is 14 percent and the project is expected to yield an annuity for 8 years. For the project to be accepted, the annual annuity must be equal to or greater than (approximately) ________.

   1. $39,223

   2. $57,556

   3. $43,114

   4. $62,389

3. Question 8

   1.5 Points

   The presence of ________ in perfect capital markets makes the total value of the firm independent of its capital structure under the NOI approach.

   1. institutional investors

   2. taxes

   3. arbitrage

   4. bankruptcy costs

4. Question 9

   1.5 Points

   A company has net operating income of $1 million, an overall capitalization rate of 16 percent, and $1 million of 10 percent debt. The total market value of the stock, using the net operating income method approach, is_____________.

   1. $5,667,000.

   2. $4,667,000.

   3. $6,667,000.

   4. $5,250,000.