The answers last time were wrong so I am trying again.

Yong Importers, an Asian import company, is evaluating two mutually exclusive projects, A and B. The relevant cash flows for each project are given in the table below. The cost of capital for use in evaluating each of these equally risky projects is 10 percent.

Year	Project A	Project B
0	$350,000	$425,000
	Cash Inflows (CF)
1	$140,000	$175,000
2	165,000	150,000
3	190,000	125,000
4	100,000
5	75,000
6	50,000

24) The NPVs of projects A and B are ________. (See Table 10.6):

A) $45,805 and -$19,312 respectively. B) $95,066 and $56,386, respectively.

C) -$45,805 and $19,312 respectively. D) none of the above.

25) In the EBIT-EPS approach to capital structure, risk is represented by

A) shifts in the cost of debt capital. B) the slope of the capital structure line.

C) shifts in the cost of equity capital. D) shifts in the times-interest-earned ratio.

26) A firm has a current capital structure consisting of $400,000 of 12 percent annual interest debt and

50,000 shares of common stock. The firm's tax rate is 40 percent on ordinary income. If the EBIT is

expected to be $200,000, two EBIT-EPS coordinates for the firm's existing capital structure are

A) ($152,000, $3.50) and ($150,000, $1.82). B) ($36,000, $0) and ($200,000, $3.04).

C) ($48,000, $0) and ($200,000, $1.82). D) ($0, $48,000) and ($200,000, $1.82).

Table 14.2

Flum Packages, Inc.

Assets	Liabilities & Equity
Current assets $12,000	Current Liabilities $ 5,000
Fixed assets 18,000	Long-term debt 12,000
	Equity 13,000
Total $30,000	Total $30,000

27) The company earns 5 percent on current assets and 15 percent on fixed assets. The firm's current liabilities cost 7 percent to maintain and the average annual cost of long-term funds is 20 percent.

The firm's initial net working capital is ________. (See Table 14.2)

A) $ 5,000. B) $10,000. C) $7,000. D) -$ 5,000.

28) The beta of the market

A) is less than 1. B) is greater than 1.

C) is 1. D) cannot be determined.

29) XYZ Corporation borrowed $100,000 for six months from the bank. The rate is prime plus 2

percent. The prime rate was 8.5 percent at the beginning of the loan and changed to 9 percent after

two months. This was the only change. How much interest must XYZ corporation pay?

A) $2,476. B) $5,417 C) $21,500. D) $18,212.