2011PostExam2PracticeQs

2011PostExam2PracticeQs - FINA 363 Post-Exam 2 Practice...

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FINA 363 Post-Exam 2 Practice Questions Capital Budgeting investment. That is, the amount of initial investment is $10 ; 000 ). If Riesling±s weighted average cost of capital (WACC) is 5% , what is the Net Present Value (NPV) of this project? Yr 0 Yr 1 Yr 2 10 ; 000 +2 ; 000 +11 ; 000 (a) $1 ; 716 : 45 (b) $1 ; 791 : 38 (c) $1 ; 882 : 09 (d) $2 ; 129 : 07 (e) $2 ; 721 : 09 2. Assume that Sangiovese Corporation has a cost of equity of 12% and a pre-tax cost debt of 4% . The current tax rate for your ²rm is 25% . Your ²rm has never issued, and does not plan to issue any preferred stocks. The Debt-Equity ratio of Sangiovese is 0 : 5 . (i.e., W d W e = 0 : 5 : ) What is the Weighted Average Cost of Capital (WACC) of Sangiovese? (a) 6 : 667% (b) 7 : 500% (c) 8 : 333% (d) 9 : 000% (e) 10 : 00% 3. Pinot Noir Industries has been evaluating a project with a cost of $100 ; 000 : Estimated net
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2011PostExam2PracticeQs - FINA 363 Post-Exam 2 Practice...

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