1)Total assets are $1000, fixed assets are $700, long-term debt is $250, and short-term debt is $300. What is the amount of net working capital? A $0 B. $50 C. $300 D. $650 E. $700Net working capital = $1000 $700 $300 = $0 3)Your parents are giving you $100 a month for four years while you are in college. At a 6% discount rate, what are these payments worth to you when you first start college? A. $3,797.40 B. $4,167.09 C. $4,198.79 D. $4,258.03 E. $4,279.32 .4)The great, great grandparents of one of your classmates sold their factory to the government 104 years ago for $150,000. If these proceeds had been invested at 6%, how much would this legacy be worth today? Assume annual compounding. A. $936,000.00 B. $1,086,000.00 C. $60,467,131.54 D. $60,617,131.54 E. $64,254,159.44 5)An investment project has the cash flow stream of $-3250, $80, $200, $75, and $90. The cost of capital is 12%. What is the discounted payback period? A. 1.24 years B. 1.85 years C. 2.24 years D. 2.85 years E. 3.05 years 6) An investment cost $12,000 with expected cash flows of $4,000 for 4 years. The discount rate is 15.2382%. The NPV is ______ and the IRR is ______ for the project. A. -$634.89; 12.60% B. $0; 15.2382% C. $4,000; 0% D. Can not answer without one or the other value as input. E. None of these. 7) Thornley Machines is considering a 3-year project with an initial cost of $618,000. The project will not directly produce any sales but will reduce operating costs by $265,000 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project the equipment will be sold for an estimated $60,000. The tax rate is 34%. The project will require $23,000 in extra inventory for spare parts and accessories. Should this project be implemented if Thornleys requires a 9% rate of return? Why or why not? A. No; The NPV is -$2,646.00. B. Yes; The NPV is $27,354.00. C. Yes; The NPV is $32,593.78. D. Yes; The NPV is $43,106.54. E. Yes; The NPV is $196,884.40. 8)A project will produce operating cash flows of $45,000 a year for four years. During the life of the project, inventory will be lowered by $30,000 and accounts receivable will increase by $15,000. Accounts payable will decrease by $10,000. The project requires the purchase of equipment at an initial cost of $120,000. The equipment will be depreciated straight-line to a zero book value over the life of the project. The equipment will be salvaged at the end of the project creating a $25,000 after-tax cash flow. At the end of the project, net working capital will return to its normal level. What is the net present value of this project given a required return of 14%? A. $3,483.48 B. $16,117.05 C. $27,958.66 D. $32,037.86 E. $49,876.02 9) What are the arithmetic and geometric average returns for a stock with annual returns of 5%, 8%, -3%, and 16%? A. 6.5%; 6.28% B. 6.5%; 9.21% C. 9.3%; 6.28% D. 9.3%; 9.21% E. 10.25%; 8.31% 10) A year ago, you purchased 300 shares of IXC Technologies, Inc. stock at a price of $10.05 per share. The stock pays an annual dividend of $.10 per share. Today, you sold all of your shares for $29.32 per share. What is your total dollar return on this investment? A. $8,781 B. $8,796 C. $8,811 D. $8,832 E. $8,921 11) What is the expected return on a portfolio comprised of $3,000 in stock K and $5,000 in stock L if the economy is normal? A. 3.75% B. 5.25% C. 5.63% D. 5.88% E. 6.80% 12) You have a $1,000 portfolio which is invested in stocks A and B plus a risk-free asset. $400 is invested in stock A. Stock A has a beta of 1.3 and stock B has a beta of .7. How much needs to be invested in stock B if you want a portfolio beta of .90? A. $0 B. $268 C. $482 D. $543 E. $600 13) Gails Dance Studio is currently an all equity firm that has 80,000 shares of stock outstanding with a market price of $42 a share. The current cost of equity is 12% and the tax rate is 34%. Gail is considering adding $1 million of debt with a coupon rate of 8% to her capital structure. The debt will be sold at par value. What is the levered value of the equity? A. $2.4 million B. $2.7 million C. $3.3 million D. $3.7 million E. $3.9 million 14) The Winter Wear Company has expected earnings before interest and taxes of $2,100, an unlevered cost of capital of 14% and a tax rate of 34%. The company also has $2,800 of debt that carries a 7% coupon. The debt is selling at par value. What is the value of this firm? A. $9,900 B. $10,852 C. $11,748 D. $12,054 E. $12,700 15) The Montana Hills Co. has expected earnings before interest and taxes of $8,100, an unlevered cost of capital of 11%, and debt with both a book and face value of $12,000. The debt has an annual 8% coupon. The tax rate is 34%. What is the value of the firm? A. $48,600 B. $50,000 C. $52,680 D. $56,667 E. $60,600 16) Your firm has a debt-equity ratio of .75. Your pre-tax cost of debt is 8.5% and your required return on assets is 15%. What is your cost of equity if you ignore taxes? A. 11.25% B. 12.21% C. 16.67% D. 19.88% E. 21.38% 18) Regional Power wants to raise $10 million in new equity. The subscription price is $20. There are currently 3 million shares outstanding, each with 1 right. How many rights are needed to purchase 1 share? A. 1 B. 3 C. 5 D. 6 E. 819) For a particular stock the old stock price is $20, the ex-rights price is $15, and the number of rights needed to buy a new share is 2. Assuming everything else constant, the subscription price is ______. A. $5 B. $13 C. $17 D. $18 E. $20