The Oil Derrick has an overall cost of equity of 12.7 percent and a beta of 1.13. The firm is financed solely with common stock. The risk-free rate of return is 4.8 percent. What is an appropriate cost of capital for a division within the firm that has an estimated beta of 1.16?

ABC, Incorporated, has a beginning receivables balance on January 1st of $720. Sales for January through April are $480, $510, $590 and $610, respectively. The accounts receivable period is 60 days. How much did the firm collect in the month of March? Assume 365 days per year.

A venture will provide a net cash inflow of $57,000 in Year 1. The annual cash flows are projected to grow at a rate of 7 percent per year forever. The project requires an initial investment of $739,000 and has a required return of 15.6 percent. The company is somewhat unsure about the growth rate assumption. At what constant rate of growth would the company just break even?

Carter’s Gym Supply currently has an operating cycle of 74.68 days. The company has a goal to increase its inventory turnover from 8.52 times to 9.74 times. What will the company’s new operating cycle be if it can achieve this goal? Assume 365 days per year.

A project has cash flows of −$129,000, $62,400, $54,800, and $41,800 for Years 0 to 3, respectively. The required rate of return is 12 percent. Based on the internal rate of return of _____ percent for this project, you should _____ the project.

Drinkable Water Systems is analyzing a project with projected cash flows of $127,400, $209,300, and –$46,000 for Years 1 to 3, respectively. The project costs $251,000 and has been assigned a discount rate of 12.5 percent. Should this project be accepted based on the discounting approach to the modified internal rate of return? Why or why not?

You purchased 550 shares of Barden Enterprises stock for $58.22 per share at the beginning of the year. The stock is currently priced at $60.27 per share. What is your dividend yield if you received total dividends of $1,012 over the year?

Overland needs to maintain 21 percent of its sales in net working capital. Currently, the store is considering a four-year project that will increase sales from its current level of $349,000 to $408,000 the first year and to $414,000 per year for the following three years of the project. What amount should be included in the project analysis for net working capital in Year 4 of the project?

Scott is considering a project that will produce cash inflows of $2,900 per year for 3 years. The required rate of return is 15.4 percent and the initial cost is $6,800. What is the discounted payback period?

What is the expected return on a portfolio that is equally weighted between Stocks M and N given the following information? State of Economy Probability of State of Economy Rate of Return if State Occurs Stock M Stock N Boom .13 .18 −.14 Normal .82 .06 .06 Recession .05 −.14 .18