What is the company cost of retained earnings

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Q1. An investment project of project of WING is expected to yield P10, 000 in annual revenues, has P2,000 in fixed costs per year, and requires an initial investment of P5, 000. Given a cost of goods sol of 60% of sales, what is the payback period in years?

a. 1.25 c. 2.50 b. 2.00 d. 5.00

Q2. THE VIVA company is planning to invest P 40, 000 in a ten- year project. The annual cash inflow is estimated to be P 12, 000. What is the internal rate of return on this period?

a. 26.00% c. 27. 34% b. 26. 66% d. 28. 98%

Q3. FERL COMPANY invested P150, 000 in new machinery that is expected to produce annual cash earnings of P50, 000 for 5 years. It is estimated that salvage value is P70, 000 during the first year and this is expected to decrease by P15, 000 annually. Payback bail out period must be

a. 1. 6 years c. 2. 5 years b. 1. 9 years d. 3. 0 years

Q4. SAWA Company reported earnings available to common stocks of P 4, 200, 000 last year. From that, the company paid dividend of P1.26 on each of its 1, 000, 000 common shares outstanding. The capital structure of the company includes 40% debt, 10% preferred stocks and 50% common stock. It is taxed at a rate of 40%. If the market price of common stock is P40 and dividends are expected to grow at a rate of 6% a year for the foreseeable future, what is the company's cost of retained earnings?

a. 9.00% c. 9.34% b. 9.15% d. 9.44%

Q5. Refer to SAWA Company. Assuming that the floatation cost is 2.5% of market price, what is the company's cost of new common stock financing given a 2.5% flotation cost?

a. 9.15% c. 9.35% b. 9.23% d. 9.44%

Q6. MASIPAG recently invested in a project that promised an internal rate of return of 15 percent. If the project has an expected annual cash inflow of P12, 000 for six years, with no salvage value, how much did MASIPAG pay for the project?

a. P31, 708 c. P45, 414 b. P35, 000 d. P72, 000

Q7. The project of UNO Company has an initial cost of P100, 000 and generates a present value of net cash inflows of P120, 000. What is the project's profitability index?

a. 0.20 c. 1.20 b. 0.80 d. 5.00

Q8. CASAYA COMPANY recently invested in a project that has an expected annual cash inflow of P7, 000 for 10 years, and an expected payback period of 3.6 years. How much did CASAYA COMPANY invest in the project?

a. P19, 444 c.P36, 000 b.P25, 200 d.P40, 000

Q9. The equity market is expected to earn 12%. Treasury bonds are currently yielding 5%. Tax rate is 40%. What is the systematic non- diversifiable risk index (beta- coefficient) if the expected return is 16.2%?

a. 0.35 c. 0.76 b. 0.60 d. 1.31

Reference no: EM133029302

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