Manta Lasers Co., a mid-sized tech manufacturer specializing in precision laser equipment, has spent the past two years in R&D developing a new, highly efficient industrial laser designed for use in surgical manufacturing and aerospace applications. Based on successful prototype testing and positive early interest from potential clients, the company is now considering moving forward with production.The required upfront investment for production and launch is $1,110,000.Drawing from historical data and market analysis, the firm has forecasted the following annual free cash flows from the project over the next six years (after all operating and capital expenses):Year 1 to Year 6: $200,000, $250,000, $275,000, $300,000, $350,000,  and $400,000. If the company’s cost of capital is 12.65%, what is the Net Present Value (NPV) of this investment? Hint: Enter your answer rounded to two decimal places.

Changes in working capital are considered insignificant and thus ignored when considering capital projects.

The adjusted WACC is the correct discount rate to use when evaluating a firm’s average-risk projects.

If you were to compare the returns of an individual stock to a market index, select the answer below that is most true.

Working capital does NOT depreciate like capital assets.

McNamara Hotels has 750,000 bonds outstanding, each with a $1,000 face value and 10 years to maturity. The bonds pay semi-annual coupon payments at an annual coupon rate of 8.42%. Currently, the bonds are trading on the secondary market at $1,032 per bond. The company has no other debt outstanding.What is the company’s annual cost of debt?Hint: Enter your answer as a percentage rounded to two decimals. Note: this is not an accounting question—I’m not looking for interest expense in dollars.

What could happen to “unused” dollars after a firm has chosen capital projects but still has remaining unallocated funds? 

Highland Courier Co. is a premium magical delivery service that specializes in secure, high-speed transport of rare goods—like spell scrolls, enchanted herbs, and royal messages—across the mountainous kingdoms. The company is planning to invest in a new griffin-powered delivery fleet, which will cost $7,775,000 upfront, including training, saddles, and a lifetime supply of enchanted salmon feed.The company projects that the griffin fleet will generate stable annual cash flows of $1,850,000 over the next 6 years, after accounting for all expenses, including griffin care, flight permits, and beak polishing. What is the internal rate of return (IRR) for this investment? Hint: Enter your answer rounded to two decimal places.

McNamara Hotels has 750,000 bonds outstanding, each with a $1,000 face value and 10 years to maturity. The bonds pay semi-annual coupon payments at an annual coupon rate of 8.77%. Currently, the bonds are trading on the secondary market at $1,062 per bond. The company has no other debt outstanding.What is the company’s annual cost of debt?Hint: Enter your answer as a percentage rounded to two decimals. Note: this is not an accounting question—I’m not looking for interest expense in dollars.

Using beta as a risk measurement device has not caught on in the real world because finding the value is nearly impossible for most investors.