1- Why financial analysts use cash flows prediction instead of accounting earnings prediction in estimating the NPV of a project?
2- ABC firm has a capital structure which is based on 60% common stock, 10% preferred stock and 30% debt. The cost of common stock is 15%, the cost of preferred stock is 11% and the pre-tax cost of debt is 9.5%. The firm's tax rate is 35%. The firm is considering a project that is equally as risky as the firm's current operations. This project has initial costs of $300,000 and annual cash inflows of $80,000, $270,000, and $112,000 over the next three years, respectively. What is the projected net present value of this project?
3- What is a bank term loan?
4- Are taxes necessary for the cost of debt financing to be less than the cost of equity financing?
5- You would like to own shares that have a record date of Friday 19 March 2018. What is the last date that you can purchase the share and still receive the dividend?