Please answer the following MCQs and T or Fs from 30 till 34 Question 30Question 32A firm with a 14 percent WACC is evaluating twoprojects for this year's capital budget. After-taxcash flows, including depreciation, are asThe rate of return investors require on the firm'scommon equity using new equity is known ascost of retained earnings (Ks).follows?Year Project (A) Project (B)$(6000)$2000Select one:$(18000)$560012$2000$5600$5600$56003$2000True4$2000$2000$5600FalseThe Net Present Value for project A is equal toa. $ 1219.2Question 33b. $ 864The Global Advertising Co, has a present capitalstructure (Which the co. feels is optimal) of 45%c. $ 23.25long term debt, 10% preferred stock, and 45%common equity?for the coming year, the company hasdetermined that it's optimal capital budget canbe externally financed with 90$M of 10%, firstmortgage bonds sold at par.20$M of preferred stock costing the company12%.d. $ 29.6Question 31The financial manager had collected the followinginformation regarding Modern Furniture Co.?Modern Furniture capital structure is 70 percentequity, 30 percent debt.The yield to maturity on the Modern Furniturebonds is 9 percent.Modern Furniture year-end dividend is forecastedto be $0.80 a share.The company's common stock in presentlyselling at $28 and next year common dividend D1is expected to be 2$ a share.The co. has 3OM common stock, net income fromnext year's is expected to be 120$ M.The Co. past annual growth in earnings anddividend has been 4%.Modern Furniture expects that its dividend willgrow at a constant rate of 9 percent a year.Modern Furniture stock price is $25.Modern Furniture tax rate is 40 percent.However, a 6% annual growth in earnings anddividend is expected for the foreseeable future.The cost of issuing new common stock is equalto 5% (Flotation costs).The co. marginal tax rate is 40%.Calculate the company's weighted average costof capital for the coming year.The firm payout ratio is 100 percent. Itsinvestment bankers anticipate that the totalflotation cost will equal 10 percent of the amountissued. Assume the company accounts forflotation costs by adjusting the cost of capital.Given this information, calculate the company'sWACC.a. 9.869%a. 13.55%b. 12.869%b. 10.78%c. 11.869%c. 10.41%d. 7.869%d. 12.56%Question 34The acceptance criteria for internal rate of returnmethod is WACC(K) IRR.Select one:TrueFalseO O O OO OO OO O O O

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Please answer the following MCQs and T or Fs from 30 till 34 Question 30Question 32A firm with a 14 percent WACC is evaluating twoprojects for this year's capital budget. After-taxcash flows, including depreciation, are asThe rate of return investors require on the firm'scommon equity using new equity is known ascost of retained earnings (Ks).follows?Year Project (A) Project (B)$(6000)$2000Select one:$(18000)$560012$2000$5600$5600$56003$2000True4$2000$2000$5600FalseThe Net Present Value for project A is equal toa. $ 1219.2Question 33b. $ 864The Global Advertising Co, has a present capitalstructure (Which the co. feels is optimal) of 45%c. $ 23.25long term debt, 10% preferred stock, and 45%common equity?for the coming year, the company hasdetermined that it's optimal capital budget canbe externally financed with 90$M of 10%, firstmortgage bonds sold at par.20$M of preferred stock costing the company12%.d. $ 29.6Question 31The financial manager had collected the followinginformation regarding Modern Furniture Co.?Modern Furniture capital structure is 70 percentequity, 30 percent debt.The yield to maturity on the Modern Furniturebonds is 9 percent.Modern Furniture year-end dividend is forecastedto be $0.80 a share.The company's common stock in presentlyselling at $28 and next year common dividend D1is expected to be 2$ a share.The co. has 3OM common stock, net income fromnext year's is expected to be 120$ M.The Co. past annual growth in earnings anddividend has been 4%.Modern Furniture expects that its dividend willgrow at a constant rate of 9 percent a year.Modern Furniture stock price is $25.Modern Furniture tax rate is 40 percent.However, a 6% annual growth in earnings anddividend is expected for the foreseeable future.The cost of issuing new common stock is equalto 5% (Flotation costs).The co. marginal tax rate is 40%.Calculate the company's weighted average costof capital for the coming year.The firm payout ratio is 100 percent. Itsinvestment bankers anticipate that the totalflotation cost will equal 10 percent of the amountissued. Assume the company accounts forflotation costs by adjusting the cost of capital.Given this information, calculate the company'sWACC.a. 9.869%a. 13.55%b. 12.869%b. 10.78%c. 11.869%c. 10.41%d. 7.869%d. 12.56%Question 34The acceptance criteria for internal rate of returnmethod is WACC(K) > IRR.Select one:TrueFalseO O O OO OO OO O O O

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