1. A firm's net income before tax, EBT [NIBT] (on the income statement) is affected by _____. a- taxes; b- interest; c-dividends
2. Larry wants to buy a house priced for $325,000. The FHA requires a 2% downpayment and will make a mortgage loan at 3.5% for 30 years [monthly payments]. About how much will Larry's monthly payments be? a-$1459.40; b-$1443.11; c-$1430.21; d-$884.72
3. Financial markets can deal with ____ and an example would be a(n) _____. a- claim on a real asset; bong... b- money market fund; check register... c- capital market assets; factory
4. Proposed project Q has the following after-tax cash flows:
Year 0 1 2 3 4
-$5,000 $1,000 $1,000 $3,000 $5,000
Using a discount rate of 8.38%, is the proposed project acceptable?
a- No; NPV= - $12843; b- No; NPV= -$45; c- Yes; NPV= $2825; d- Yes; NPV= $13358
5. In evaluating a Capital Budgeting proposed project, you have the expected After Tax Cash Flow, the life of the proposed project and the Weighted Average Cost of Capital (WACC). The most important of these is the ___ because ______.
a- after tax cash flow; the owners will get some cash; b- life of the project, it determines how long the cash will come and be reinvested; c- WACC, earning less than this means owners and lenders will not receive their required return.