Fin 571 Final Exam 3 Essay examples

1583 WordsSep 12, 20137 Pages
FIN 571 FINAL EXAM 3 http://www.finalexamguideline.com/FIN-571-FINAL-EXAM-3-53.htm 1) Whenever a firm splits itself into separate units, with each unit having limited liability with respect to its financing, the capital structure of each unit becomes __________ 2) An investor's risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true? 3) An all-equity-financed firm would __________. 4) The capital budgeting process can be broken down into five steps. These steps include which of the following? 5) Projects can be classified into various categories. These include: 6) Boeing Corporation is a world leader in commercial aircraft. In the face of competition, Boeing…show more content…
29) An investor's risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true? 30) Calculate the IRR for the following investment project: initial investment is \$75,000; inflows are \$20,000 for the next five years; required rate of return is 15%. (Round your answer to the nearest whole percentage) 31) Your firm uses the payback method but does not discount any of the cash flows. Calculate the payback for the following investment: A machine costs \$200,000 with after-tax installation costs of \$15,000. After-tax cash inflows are expected to be 36,000 per year for the next seven years. 32) Compute the NPV for the following project. The initial cost is \$5,000. The net cash flows are \$1,900 for four years. The net salvage value is \$1,000 when the project terminates. The cost of capital is 10%. 33) Each year for eight years, an investment will generate incremental sales of \$8,000 and cash operating expenses of \$2,500. The applicable tax rate is 30% and depreciation is \$2,000. What is the net cash flows for each of the eight years? 34) The __________ method breaks down when evaluating projects in which the sign of the cash flow changes. 35) In practice, the __________ rule is preferred. 36) Net present value ( NPV) is the difference between __________. 37) Compute the IRR for the following project. The initial cost is