1. Corporation has been presented with an investment opportunity which will yield cash flows of 30,000 per years 1 through 4, 35,000 per year in years 5 through 9 and 40,000 in year 10. this investment willcost the firm 150,000 today, and the firms cost of capital is 10 percent. At what point will the initial investment be paid back?
a. at end of 4th year
b. at end of 5th year
c at end of 6th year
d. at end of 7th year
2. A firm has several options available to it in times of financial distress. The firm may:
reduce capital and R & D spending.
take any or all of the other actions.
raise new funds by selling securities or major assets.
file for bankruptcy.
negotiate with lenders.