1. When a depreciable asset is sold at whatever market price it was able to be sold for, a tax gain or tax loss on disposal is calculated, based on the ________ of the asset at the time of disposal.
a. difference in market value and salvage value
b. highest difference in book and market value
c. market value only
d. book value only
2. Your firm has preferred stock outstanding that pays a current dividend of $4.50 per year and has a current price of $59.30. You anticipate that the economy will grow steadily at a rate of 2% per year for the foreseeable future. What is the market required rate of return on your firm's preferred stock?
a. 7.59% ; b. 7.74% ; c. 9.74% ; theirs is not enough information to answer this question
3. In capital budgeting, the ________ is the appropriate discount rate to use when calculating the NPV of an average risk project.
a. IRR ; b. WACC ; c. cost of Equity ; d. cost of debt