CORRECTBrooks Corp.'s projected capital budget is $2,000,000, its target capital structure is 60% debt and 40% equity, and its forecasted net income is $600,000. If thecompany follows a residual dividend policy, what total dividends, if any, will it pay out?
QUESTION:7[QUESTION BANK ID:269484]TYPE:MULTIPLE CHOICECORRECTSand Mountain Resort has a 45 % tax rate. Its total interest payment for the year just ended was $6.8 million. What is the interest tax shield?
QUESTION:8[QUESTION BANK ID:269479]TYPE:MULTIPLE CHOICECORRECTFoley Systems is considering a new investment whose data are shown below. The equipment would be depreciated on a straight-line basis over the project’s3-year life, would have a zero salvage value, and would require some additional working capital that would be recovered at the end of the project’s life.Revenues and other operating costs are expected to be constant over the project’s life. What is the project’s NPV? (Hint: Cash flows are constant in Years 1 to3.)