The M.I.R.R. is based on
|
a |
Cash flows being reinvested at a rate always different from WACC |
|
b |
Cash flows being reinvested at the YTM on treasury bonds. |
|
c |
Cash flows being reinvested at the IRR. |
|
d |
Cash flows being reinvested at the WACC or a comparable rate. |
Question 2 (10 points)
Flotation costs are incurred in the :
|
a |
Bond market only |
|
b |
Preferred equity market only |
|
c |
Secondary capital market |
|
d |
Primary capital market |
An investment costs $1548 and pays $138 in perpetuity. If the rate of interest is 9%, what is the NPV of the investment ?
|
a |
Negative $16.67 |
|
b |
Negative $14.67 |
|
c |
$0 |
|
d |
$18.98 |
The W.A.C.C. is a :
|
a |
Risk-adjusted discount rate under all circumstances |
|
b |
Non-stochastic discount rate under all circumstances |
|
c |
Composite opportunity cost metric |
|
d |
Simple opportunity cost metric |
At a crossover rate of return , two or more streams of Net Present Values are :
|
a |
Equalized |
|
b |
Flows with equal Internal Rates of Return |
|
c |
Flows with negative Internal Rates of Return |
|
d |
Discontinuous |
An investment of $232 will produce $312.18 in 2 years. What is the Annual Rate of Interest ?
|
a |
36% |
|
b |
16% |
|
c |
24% |
|
d |
20 |
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