Internal Rate of Return is not the best tool for analyzing corporate investment projects because

a. It is difficult to use this analytical tool

b. You are unable to determine the actual rate

c. The method assumes cash flows are reinvested at the rate determined by the IRR

d. The method ignores how long it takes to recover the initial investment

2. A 10-year zero-coupon bond that yields 5% is issued with a $1000 par value. What is the approximate market value of the bond?

$614

$64

$6,140

None of these

3. The coupon rate on an issue of debt is 8%. The yield to maturity on this issue is 10%. The corporate tax rate is 31%. What would be the approximate after-tax cost of debt for a new issue of bonds?

5.28%

2.48%

6.90%

3.14%

4. A firm's stock is selling for $60. The next annual dividend is expected to be $3.00. The growth rate is 4%. The flotation cost is $5.00. What is the cost of retained earnings?

8.0%

9.0%

10.0%

none of these