MT2 Review (Risk and Return)
FINA 6100 Questions and Problems for review for the second midterm exam
Chapter 8 Risk and Return
Identify the choice that best completes the statement or answers the question.
11. You have the
Alternative to the Capital Budgeting Model
1. Economic Profit (EP) = Econ Value-Added = NOPAT - $WACC
NOPAT = Net Operating Profit After Tax = EBIT Tax
$WACC = Dollar Cost of Capital = WACC * Capital invested
Cooper Industries, Inc.: Case Questions
1. If you were Mr. Cizik of Cooper Industries, would you try to gain control of Nicholson File
Company in May 1972?
2. What is the maximum price that Cooper can afford to pay for Nicholson
and still keep the acquisi