A firm with a 9.5 percent cost of capital is considering a project for this year’s capital budget.  The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$11,000 $3,500 $4,800 $4,200 $5,000 Calculate the project’s payback period.

If a firm’s beta is 0.8, the risk-free rate is 3.5%, and the expected return on the market is 10.5%, what will be the firm’s cost of equity using the CAPM approach?

A firm with a 10 percent cost of capital is considering a project for this year’s capital budget.  The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$10,000 $3,900 $4,200 $3,400 $4,900 Calculate the project’s profitability index (PI).

A firm with a 13.5 percent cost of capital is evaluating two projects for this year’s capital budget.  The projects’ expected after-tax cash flows are as follows: Year: 0 1 2 3 Project X: -$4,000 $2,000 $1,300 $2,100 Project Y: -$4,000 $1,500 $1,400 $2,100 If Projects X and Y are mutually exclusive, which one(s) should the firm adopt?

Given the following information on the project’s net operating working capital, the cash flow of year 3 due to investments in net operating working capital is________? Time    NOWC 0         21.37 1         30.05 2         31.61 3         20.00

A firm with a 9.5 percent cost of capital is considering a project for this year’s capital budget.  The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$6,000 $2,800 $2,700 $2,200 $2,900 Calculate the project’s internal rate of return (IRR).

Thurman Industries plans to issue a $100 par perpetual preferred stock with a fixed annual dividend of 8 percent of par.  It would sell for $107.20, but flotation costs would be 5 percent of the market price.  What is the percentage cost of preferred stock after taking flotation costs into account?

The Bettencourt Company’s currently outstanding bonds have a 12.1 percent coupon and a 9.2 percent yield to maturity.  Bettencourt believes it could issue new bonds that would provide a similar yield to maturity.  If its marginal tax rate is 30 percent, what is Bettencourt’s after-tax cost of debt?

A firm with a 10 percent cost of capital is considering a project for this year’s capital budget.  The project’s expected after-tax cash flows are as follows: Year: 0 1 2 3 4 Cash flow: -$9,000 $3,200 $4,100 $4,400 $3,700 Calculate the project’s profitability index (PI).

The Bettencourt Company’s currently outstanding bonds have a 7.8 percent coupon and a 9.1 percent yield to maturity.  Bettencourt believes it could issue new bonds that would provide a similar yield to maturity.  If its marginal tax rate is 25 percent, what is Bettencourt’s after-tax cost of debt?