FNAN 522 Module3 Homework. Questions & Answers

Question 1 Correct Mark 1.00 out of 1.00 Question 2 Correct Mark 1.00 out of 1.00 Started on Sunday, 10 November 2019, 6:36 PM State Finished Completed on Sunday, 10 November 2019, 7:01 PM Time taken 25 mins 12 secs Grade 20.00 out of 20.00 (100%) A company has a risk free rate of 3% and a risk premium of 6%. Its tax rate is 35%. What is the company's cost of debt? Select one: a. 3.90% b. 2.10% c. 3.15% d. 5.85% A company is thinking of issuing more common stock. Its stock's current market price is $50 a share with an expected dividend annual one year from today of $3 a share. Dividends are expected to grow 5% per year and there are no flotation costs. What is the company cost of new common stock? Select one: a. 11.00% b. 13.65% c. 65% d. 12.58% Your answer is correct. FNAN522-020_860- Question 3 Correct Mark 1.00 out of 1.00 Question 4 Correct Mark 1.00 out of 1.00 A company has retained earnings of $1.5 million and net income of $8 million. What is the retention ratio (expressed as a decimal)? Select one: a. 0.01875 b. 0.8125 c. 0.1875 d. 0.08125 Your answer is correct. A company makes an initial $10,000 investment in a project. This project is projected to earn $8000 in year one, $10,000 in year 2, $12,000 in year 3, and $20,000 in year 4. If the WACC is 5%, what is the project's present value? Select one: a. $37,619 b. $40,000 c. $43,509 d. $33,509 Your answer is correct