FIN3400 Game Show 3 ch 9-11 review

Which of the following would you classify as debt lenders for a firm?

• preferred shareholders, banks and nonbank lenders

• nonbank lenders, common shareholders, and commercial banks

• preferred shareholders, common shareholders, and suppliers

• suppliers, nonbank lenders, and commercial banks

If we know the _____ and the EBIT, we can estimate the taxes for a project for the year

• MACRS percentage

• sunk costs

• tax rate

• salvage value

The ________ model answers one basic question: How soon will I recover my initial investment?

• Payback Period

• IRR

• NPV

• Profitability Index

The most popular alternative to NPV for capital budgeting decisions is the ________ method

• profitability index

• discounted payback period

• payback period

• internal rate of return (IRR)

A major metric of a company's health and prospects for a long life is how much __ it generates

• depreciation

• cash flow

• tax deferral

• net income

Revenue=$24k,COGS=$12K, other expenses=$6K, & depreciation=$2,k,interest exp=$2k. What is EBIT?

• $12,000

• $6,000

• $4,000

• $2,000

Operating Cash Flow (OCF) is equal to what

• EBIT - Depreciation + Taxes

• EBIT + Depreciation - Taxes

• EBIT - Depreciation - Taxes

• EBIT + Depreciation + Taxes

Use SML to determine the required rate of return of a stock with a beta of .80, market return is 12.50%, and the risk free rate of return is 3.5%

• 13.50%

• 10.70%

• 7.20%

• 2.80%

30-yr $1,000 par value,8% coupon semiannual bond with net price of $964.00.What is the yield?

• 4.16%

• 8.33%

• 8.30%

• 8.00%

The weighted average cost of capital is ________.

• avg cost of each financing component, weighted by proportion

• the cost of capital for the firm as a whole

• made of cost of debt,cost of preferred stock,cost of equity

• all of these