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Which of the following best describes the relationship between IRR and NPV rules?
If IRR of project A is greater than IRR of project B, accept A even if NPV of B is higher
If NPV of project B is greater than NPV of project A, accept B even if IRR of A is higher
If IRR of project A is lower than hurdle rate and IRR of B is higher than hurdle rate, accept project A because it will have a higher NPV
If NPV of project A is higher than B and IRR of project B is higher than project A, decide with payback rule
If IRR of project B is equal to the discount rate and NPV of B is positive, accept project B.
WACC The Pawlson Company year-end balance sheet is shown below. Calculate Pawlson's WACC using market-value weights.
The Wordsmith Corporation has 10,000 shares outstanding at $30 each. They expect to raise $150,000 by a rights offering with a subscription price of $25. How many rights must you turn in to get a new share? A. 0.60 B. 1.20 C. 1.67 D. 2.00 E. Insuffic..
A bond that settles on June 7, 2013, matures on July 1, 2033, and may be called at any time after July 1, 2023, at a price of 117. The coupon rate on the bond is 5.6 percent and the price is 133.00. What is the yield to maturity and yield to call on ..
Cyree Inc. has annual sales of $80,000,000; its average inventory is $20,000,000; and its average accounts receivable is $16,000,000. The firm buys all raw materials on terms of next 35 days, and it pays on time. The firm is searching for ways to sho..
Miracle Oil Corporation's bonds currently yield 3.5%; the annual interest payment is $45, the bonds have 6 years remaining until maturity. What is the bond's current market value?
In each pair below, indicate which asset exhibits the greatest credit risk. Describe why. a. Commercial loan to a Fortune 500 company or a loan to a corner grocery store b. Commercial loans to two businesses in the same industry; one is collateralize..
You own a portfolio that has $3,500 invested in Stock A and $4,500 invested in Stock B. If the expected returns on these stocks are 11 percent and 14 percent, respectively, what is the expected return on the portfolio?
For each of the following, compute the future value (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16)): Present Value Years Interest Rate Future Value..
Show transcribed image text ABC Corporation has issued callable bonds that have 8% annual coupon rate paid semianmally. Bonds could be redeemed starting from the end of year 2. The call premium equals the amount of the annual coupon. What is the val..
What is the profit or loss on the call just prior to expiration if the stock price is $108?
You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two different salary arrangements. You can have $84,000 per year for the next two years, or you can have $73,000 per year for the next two years, along wi..
Which one of the following will result from a stock repurchase?
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