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As a manager, you have been given an investment budget of $12 million. You must choose from among the following three independent projects:   Project Year 0 Year 1 Year 2 Year 3 Year4 Year 5 A -$6 $5 $5 $7     B -$6 $4 $4 $4 $4 $1 C -$6 $3 $3 $3 $3 $3 (All dollar amounts are in millions.)   Your cost of capital is 12 percent per year. Given your investment budget of $12 million, which projects you will undertake, if any?

Quasar Technologies Inc. has up to $50 million that it can invest in the following projects:       Project Initial Investment Required (In $Million) Present Value of Future Cash Flows (In $Million) A 18 27 B 12 18 C 8 12 D 8 10 E 10 11 F 30 60 G 4 5   Which projects should Quasar accept?

The problem of multiple internal rates of return (IRRs) can occur when:

You believe that you will need to have $75,000 per year in terms of today’s dollars when you retire in 40 years to live comfortably. That is, you want $75,000 per year worth of purchasing power in today’s dollars once you retire. You will take out the first payment one year after you retire and you expect to need a total of 30 equal payments. You currently have $5,000 in the bank. You plan to make payments at the end of each of the next 40 years. The return on investments is 8.00% per year (i.e., 8.00% per year is the nominal rate). You now need a savings and spending plan that will take inflation into account, which is expected to be 3.00% per year going forward. Assume that your payments (measured in nominal dollars) will increase 3.00% per year along with inflation. What is the amount (in nominal dollars) of the first deposit you must make to put this plan into action?

You have a chance to participate in a project that produces the following cash flows: ___C0__________C1__________C2___ -$10,000       -10,000      +$25,000 The internal rate of return is 15.83% per year. If the opportunity cost of capital is 10.00% per year, would you accept the offer?

The Wall Street Journal reported that the winner of a Massachusetts State Lottery prize had the misfortune to be both bankrupt and in prison for fraud. The prize was $9,420,713 to be paid in equal installments of $495,827 at the end of each of the next 19 years. (There were 20 installments, but the winner had already received the first payment.) The bankruptcy court judge ruled that the prize should be sold off to the highest bidder and the proceeds used to pay off creditors. If the appropriate discount rate for a bidder was 8.00% per year, how much should the bidder have been prepared to pay for the remaining 19 annual payments of $495,827?

John borrowed $20,000 to finance his college education. If the finance charge on the loan is 6.00% per year, and he will pay off the loan in 10 equal, annual, end-of-year payments, how much total interest (rounded to the nearest dollar) will he pay?

Which one of the following firms’ common stocks is likely to have the lowest beta (i.e., systematic risk)?

The pecking order theory of capital structure predicts that firms will fund positive NPV projects first with internally generated funds, then with debt, and finally with new equity. What is the primary insight of the pecking order story theory that leads to this funding ordering in which equity is only issued as a last resort?

A bond with 15 years left to maturity makes coupon payments of $40.00 semiannually and sells for $1,150.00. The bond’s annual yield to maturity (compounded semiannually) is: