2nd midterm ver A - 2st Midterm UGBA 103 Spring 2009 Do not...

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2 st Midterm UGBA 103 Spring 2009 Do not open the test until instructed to do so. Please begin by printing your name and section information. Then sign your name at the bottom of the page. Print your name: _______________________________________________ Print your SID #: _______________________________________________ Print your section number: ___________________________________ When you are instructed to open the exam, please begin by initially every page in the top right-hand corner. This midterm is closed book. You may refer to 1 double-sided page of notes. The notes may be typewritten. The page cannot exceed 8.5" x 11" (i.e., a standard sheet of paper). You may use any calculator. You may not use a computer. All cell phones must be turned off. You may not place or receive calls, send or receive text messages, or access the Internet during this exam. Many of the questions are multiple choice. You only get credit for correct answers. If a question requires more than one answer (e.g., part A and part B), you will get partial credit if you answer some, but not all, parts correctly. You are not required to show your calculations and will not get credit for showing work that results in an incorrect answer. I will distribute different versions of the exam. These may have questions in different order; answers in different order; and/or different input numbers (e.g., different interest rates) in otherwise similar questions. There are 20 questions. Each question counts for 3 points unless otherwise indicated. Please note that the first  12 questions are multiple choice and are likely to take less time. Budget your time accordingly. Sign your name: ____________________________________ 1
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a 2
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Name___________________________________   MULTIPLE CHOICE.  Choose the one alternative that best completes the statement or answers the question.  1)  3
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The  Sisyphean  Company  is  considerin g a new  project  that will  have an  annual  depreciati on  expense  of $2.5  million.  If  Sisyphean' s marginal  corporate  tax rate is  40% and  their  average  corporate  tax rate is  30%, then  what is  this year’s  value of  the  depreciati on tax  shield on  their new  project  (assuming  that  Sisyphean  plenty of  income  that it  needs to  shield)? 
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1) 
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_____  A) 
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$1,000,000 
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B) 
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$750,000 
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C) 
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$1,750,000 
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D)  $ 1  
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You are  considerin investing  $600,000  in a new  automated  inventory  system  that will  provide an  after - tax  cost  savings of  $50,000  next year.  These cost  savings  are  expected  to grow at  the same  rate as  sales.  If  sales are  expected  to grow at  5% per  year and  your cost  of capital  is 10%,  then what  is the  NPV of  the  automated  inventory  system? 
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2)  _____  A
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$400,000 
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This note was uploaded on 11/13/2009 for the course ECON 181 taught by Professor Kasa during the Spring '07 term at University of California, Berkeley.

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2nd midterm ver A - 2st Midterm UGBA 103 Spring 2009 Do not...

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