134A07M2_soln

134A07M2_soln - Economics 134a Midterm Exam 2 Summer 2007...

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Economics 134a Midterm Exam 2 Summer 2007 Version 1 Name: _________________________________________ Perm: __________________________________________ Section which you attend : 9.30 or 12.30 Questions 1 – 9 are multiple choice, worth 8 points each. Questions 10 is worth 13 points, and question 11 is worth 15 points each. For any calculations, please show your work .
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1. Interest rates or rates of return on investments that have been adjusted for the effects of inflation are called _____ rates. a. real b. nominal c. effective d. stripped e. coupon 2. A project will increase sales by $60,000 and cash expenses by $51,000. The project will cost $40,000 and be depreciated using straight-line depreciation to a zero book value over the 4-year life of the project. The company has a marginal tax rate of 35%. What is the PER YEAR operating cash flow (OCF) of the project using the tax shield approach? a. $5,850 b. $8,650 c. $9,350 d. $9,700 e. $10,350 3. A stock had returns of 8%, -2%, 4%, and 16% over the past four years. What is the standard deviation of this stock for the past four years? a.
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This note was uploaded on 06/22/2009 for the course ECON 134a taught by Professor Lim during the Spring '08 term at UCSB.

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134A07M2_soln - Economics 134a Midterm Exam 2 Summer 2007...

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