Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Which of the following is correct?
a. NPV will be higher if sunk costs are included in a project's cash flows
b. A good ex of a sunk cost is a situation where a company builds a restaurant and that results in lower sales by another of its restaurants.
c. A good ex of a sunk cost is a situation where a company builds a restaurant and closes another of its restaurants.
d. A good ex of a sunk cost is a situation where a company evaluated a site for a new restaurant last year, expensed the cost on its income statement, and now builds the restaurant
e. none of the above

TUNDRA Corporation's stock sells for $50 per share. A call option on the stock has a strike price of $55. A put option on the stock also has a strike price of $55. Which of the following is correct?
a. The call option is in-the-money
b. The put option is in-the-money
c. Both the call option and the put option are out-of-the money
d. The call option has a value of $5
e. none of the above

A firm plans to purchase equipment for $1.5 million. It will cost 200,000 to modify it for use in the firm's facility. The equipment is in the 3-year MACRS class. find out depreciation expense for Year 3.
a. $222,150
b. $251,770
c. $566,667
d. $500,000
e. none of the above

A proposed project is much riskier than average. The best way to account for its added risk is:
a. Ignoring it because project risk cannot be measured accurately.
b. Decreasing the discount rate to account for the higher risk
c. Increasing the discount rate to account for the higher risk
d. Reducing the NPV by 5% to account for the higher risk
e. none of the above

A company needs to decide whether to invest in a project now or wait a year until better information is available. The project has a positive expected NPV, but it could be negative if cash flows are less than expected. No competitors are likely to invest in a similar project if the company decides to wait. Which of the following best describes the issues the company is facing in making its decision?

The more uncertainty about the future cash flows, the more reason to go ahead with the project today.
a. NPV should be even higher by waiting a year, since it is positive today.
b. The project should be adopted now to lock in the expected positive NPV.
c. Waiting would probably reduce the project's risk
d. none of the above

A stock is currently selling for $25. A 6-month call option on the stock has a strike price of $30 and sells for $0.50. find out the exercise value of the option?
a. $0.00
b. $4.50
c. $5.00
d. $24.50
e. none of the above

Which of the following is not a real option?
a. The option to switch the type of vehicle manufactured in a plant
b. The option to expand into a foreign country
c. The option to buy shares of stock if its price goes up.
d. The option to abandon a project.
e. none of the above

The current price of a stock is $22, and at the end of one year its price will be either $27 or $17. The annual risk-free rate is 6.0%, based on daily compounding. A 1-year call option on the stock, with an exercise price of $22, is available. Based on the binominal model, what is the option's value?
a. $2.99
b. $2.70
c. $2.43
d. $3.29
e. $3.62

A company purchases equipment for $5 million, incurs shipping costs of $30,000 and installation costs of $50,000. It also requires additional net working capital of $100,000. What is the depreciable base?
a. $5,000,000
b. $5,180,000
c. $5,080,000
d. $5,030,000
e. none of the above

Which of the following is an ex of a real option?
a. An option to buy stock at a specified price for a specified period of time
b. An option to sell stock at a specified price for a specified period of time
c. An option to invest in a project today or to wait a year.
d. An option to buy either an American or European option
e. none of the above

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M924062
  • Price:- $20

Guranteed 24 Hours Delivery, In Price:- $20

Have any Question? 


Related Questions in Basic Finance

What ethical considerations might enter into decisions that

What ethical considerations might enter into decisions that result in cash flow and stock price effects that are valued lower than they might otherwise have been?

What is the accounting identity list at least three of the

What is the accounting identity? List at least three of the assumptions underlying financial statements? Identify at least three current asset accounts ? What is the operating cycle ? Identify three current liability acc ...

1 suppose that after reading about a recent murder in your

1. Suppose that, after reading about a recent murder in your town, you want to learn more about what causes people to kill. You go to the library and check out a book written by an expert in the field. Explain which meth ...

1 what is business culture does national culture affect

1. What is business culture? Does national culture affect business culture? Discuss some implications of national culture for business culture. 2. Discuss how national culture affects the business culture and the busines ...

1 a successive independent survey design and a longitudinal

1. A successive independent survey design and a longitudinal survey design both examine changes in responses over time. How do they differ in their approach? 2. Distinguish between demographic and epidemiological researc ...

1 define external validity and indicate its importance to

1. Define external validity, and indicate its importance to scientific progress. 2. Why is it never possible to know whether a research finding will generalize to all populations of individuals? How do behavioral scienti ...

The following two statements were posted on a web site

The following two statements were posted on a web site (www.inter fluidity.com) in a discussion of agency costs and leveraged investment funds. Leveraged investment funds are funds such as a hedge funds that borrow a con ...

In late april 2010 apples stock was selling for more than

In late April 2010, Apple's stock was selling for more than $260 per share. The following appeared in a column in the Wall Street Journal, listing potential problems facing Apple that might cause the price of the firm's ...

1 why has real estate often been a key factor in corporate

1. Why has real estate often been a key factor in corporate restructuring? 2. Why might refinancing be considered an alternative to a sale-leaseback? 3. What factors might cause the highest and best use of real estate to ...

Find two variables that you think should be either

Find two variables that you think should be either positively or negatively correlated. Measure these two variables in a sample of participants (for instance, your classmates). Calculate the Pearson correlation coefficie ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro