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Which of the following factors would explain how a company’s cash balance could have increased even though the company had a negative cash flow last year?

A firm has 120,000 shares of stock outstanding, a sustainable rate of growth of 3.8%, and $648,200 in next year’s free cash flow. What value would you place on a share of this firm’s stock if you require a 14% rate of return?

Which of the following is not typically considered a function of financial intermediaries?

Part II: Short Problems begins here–Answer 5 of the following 8 questions @ 8 points each. Select yes if you understand the instructions, and continue the exam.

The major benefit of diversification is the:

Part 2: Quantitative ProblemsDo not answer more than 5 problem questions (only the first 5 questions will be counted).All non-MC quantitative questions require showing your work for full credit all answers must be legible to receive credit. Partial credit is awarded.All rate problems must be carried a minimum of 5 decimal places and final answers must be in % form.Round all final answers for $ problems to the nearest cent.

A project has a beta of 0.97, the risk-free rate is 4.1%, and the market risk premium is 8.1%. What is the project’s expected rate of return?

Mansi Inc. is considering a project that has the following cash flow data. What is the project’s payback period?  Year 0    1   2   3   Cash flows -$650 $300 $325 $350

You are considering two mutually exclusive, equally risky, projects. Both have IRRs that exceed the WACC. Which of the following statements is CORRECT? Assume that the projects have normal cash flows, with one outflow followed by a series of inflows.

If a firm earns the WACC on its assets, then: