FIN 221 Exam 3 Fall 2009
Identify the choice that best completes the statement or answers the question.
Hindelang Inc. is considering a project that has the following cash flow and WACC data.
What is the project's
Note that a project's projected MIRR can be less than the WACC (and even negative), in which case it
will be rejected.
Mayspring Corporation common stock is currently selling for $72.00 per share. A call option on Mayspring
Corporation that expires in 2 months has an exercise price of $69. This call option is said to be ____________.
As a member of UA Corporation's financial staff, you must estimate the Year 1 cash flow for a proposed project
with the following data.
What is the Year 1 cash flow?
Sales revenues, each year
Other operating costs
To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now
has 20 years to maturity.
This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $875, and
has a par value of $1,000.
If the firm's tax rate is 40%, what is the component cost of debt for use in the WACC