Financial Institutions transform funds by term, risk, and size.

Which of the following statements regarding the NPV decision rule is FALSE?

Benefactor Cumbersome has $25 million in debt with a cost of 4%, $5 million in preferred stock with a cost of 6%, and $30 million in equity with a cost of 10%.  If the tax rate is 21%, the weighted average cost of capital is closest to:

You are an analyst for Northington Berlin (NBI). You have gathered the returns for the stock and the S&P 500 and need to calculate beta to complete your analysis. Given the returns below, the beta of NBI is closest to: NBI S&P 2013 2.85% 8.25% 2014 4.25% 6.45% 2015 -4.85% -4.50% 2016 12.35% 4.38% 2017 5.15% 8.55%

You are comparing two annuities which offer monthly payments for ten years. Both annuities are identical with the exception of the payment dates. Annuity A pays on the end of each month while annuity B pays on the first day of each month. Which one of the following statements is correct concerning these two annuities?

Assume you own NNN Corp. that has $100 million in cash and $750 million in debt.  The company is generating free cash flow of $125 million per year starting this year and will grow at 7% per year for the foreseeable future.  If the weighted average cost of capital is 12%, what is the firm’s equity value per share if they have 100 million shares outstanding?

You are considering buying Goggle stock and see the beta is 1.5, the risk-free rate is 3%, and the expected return on the market is 8%. What is the required return on Goggle?

    Beta Volatility “Eenie” 0.45 20% “Meenie” 1.75 18% “Miney” 1.05 25% “Moe” 1.20 35%   Using the table above, which of the firms has the most stand alone risk?  

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  Beta Volatility “Eenie” 0.45 20% “Meenie” 1.75 18% “Miney” 1.05 25% “Moe” 1.20 35% Using the table above, which of the firms has the most portfolio risk?