1. A firm is most likely to call an outstanding bond issue when:
a. interest rates rise
b. it needs to raise new funds
c. interest rates fall
d. its cost of capital increases
2. A firm is evaluating a project that will increase annual cash sales by $145,000 and increase annual cash costs by $94,000. The project will initially require $110,000 in fixed assets that will be depreciated straight-line to a zero book value over the four-year life of the project. The applicable tax rate is 32 percent and the required rate of return is 10%. Compute the Net Present Value of the Project.
a. $27,826
b. $43,480
c. $63,920
d. $29,920