1. The interest tax shield is equal to the:
A. difference between the interest expense and income taxes.
B. amount of interest paid in a given year.
C. product of the interest expense and the tax rate.
D. product of the debt principal and the interest rate on debt.
2. A project produced net operating profit after tax of $585,286 last year. depreciation expenses were 104,923, capital expenditures were $201,687 and net working capital increased by 48,723. what is the projects free cash flow?
A. 503, 883
B. 569,817
C. 524,522
D. 447,783
E. 439,799
3. A project requires an investment of $5,000 today and it is expected to generate after tax cash flows of $2,500 per year for next three years. The company’s weighted average cost of capital is 9.8% per year. What is the project’s internal rate of return?
A. 16.7%
B. 19.6%
C. 17.3%
D. 23.4%
E. 11.3%