finance for paven1001 ONLY

Question 1

Two firms may not be comparable because

Question 2

Tali is considering a new project. The project will generate revenues of $16 million and operating costs of $9,000,000 annually for the next 5 years. Interest expense is $1,000,000 per year. It requires an additional machine that costs $15 million dollars and will be fully depreciated (to a zero book value) on a straight?line basis over 5 years. The machine has a salvage value of $2,000,000. Tali's tax rate is 30%. The beta of the project is 1.10. The risk-free return is 5% and the return on the market is 15%. What is the net present value of the project?

Question 3

One of the main adjustments to the APV method is to add the present value of the interest tax shields

[removed] True

[removed] False

Question 4

Enterprise value measures the net cost of acquiring the debt

[removed] True

[removed] False

Question 5

The flow to equity method is the most common method used for valuation

[removed] True

[removed] False

Question 6

In evaluating the business strategy, you look at the economic conditions and the industry

[removed] True

[removed] False

Question 7

The APV method is comprised of the all equity NPV of a project and the NPV of financing effects. The financing effects can include

Question 8

When using adjusted present value, the discount rate is the

Question 9

Operating cash flows do not consider

Question 10

One example of a value driver is

Which of the following is an advantage of comparable measures?

Which method values equity instead of the entire firm?

Cal is considering a new project. The project will generate revenues of $16 million and operating costs of $7,000,000 annually for the next 5 years. Interest expense is $1,000,000 per year. It requires an additional machine that costs $20 million dollars and will be fully depreciated (to a zero book value) on a straight?line basis over 5 years. The machine has a salvage value of $2,000,000. Cal's tax rate is 30%. The beta of the project is 1.30. The risk-free return is 5% and the return on the market is 15%. What is the net present value of the project?

TBS's working capital policy is to have a large investment in current assets and to use a small amount of short-term debt. As a result, part of their temporary current assets are financed with long-term debt. TBS has a (an) ______ working capital policy.

Comparable ratios are the only way to measure horizon value.

[removed] True

[removed] False

Marketable securities are an example of a non-operating asset

[removed] True

[removed] False