1. Alpha Industries is considering a project with an initial cost of $7.5 million. The project will produce cash inflows of $1.55 million per year for 7 years. The project has the same risk as the firm. The firm has a pretax cost of debt of 5.46 percent and a cost of equity of 11.17 percent. The debt–equity ratio is .55 and the tax rate is 39 percent. What is the net present value of the project?
$263,559
$482,364
$463,811
$397,552
$417,430
2. on September 1, 2016 an investor purchases a $10,000 par T-bond that matures in 10 years. The coupon rate is 2.4 percent. the yield to maturity is 2.25. the price of the bond is.
A. $9,868.04
B. $9,300.55
C. $10,132.99
D. $10,133.65
E. none of the answers
3. A supplier grants your firm credit terms of 3/10, net 60. What is the effective annual rate of the discount if the firm purchases $1,750 worth of merchandise?
24.90 percent
21.90 percent
20.10 percent
27.60 percent
27.90 percent