Question 14 Assume a project has normal cash flows. Question 21 Which one of the following would NOT result in incremental cash flows and thus should NOT be included in the capital budgeting analysis for a new product? Question 20 Puckett Inc.
In millions, how large could sales have been if the company had operated at full capacity? Based on the binomial model, what is the option's value?
Correct Answer: If a company's tax rate increases but the YTM on its noncallable bonds remains the same, the after-tax cost of its debt will fall. This same situation is expected to persist in the future.All rates are after taxes, and assume that the firm operates at its target capital structure. Question 13 4 out of 4 points Braddock Construction Co. Hint: Use daily compounding. Based on the CAPM approach, what is the cost of common from reinvested earnings? Correct Answer: A firm's cost of reinvesting earnings is the rate of return stockholders require on a firm's common stock. What is the cost of common from reinvested earnings based on the DCF approach? What is the firm's cost of common from reinvested earnings based on the CAPM? Question 50 To increase productive capacity, a company is considering a proposed new plant.
Correct Answer: Call options generally sell at prices above their exercise value, but for an in-the-money option, the greater the exercise value in relation to the strike price, the lower the premium on the option is likely to be.
Answer Selected Answer: If a company assigns the same cost of capital to all of its projects regardless of each project's risk, then the company is likely to reject some safe projects that it actually should accept and to accept some risky projects that it should reject.
What is the value of a put option, assuming the same strike price and expiration date as for the call option?