University of Louisiana, Lafayette - FNAN 522 Module 3 Homework. Latest 2022
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Course
FNAN 522
Institution
University Of Louisiana, Lafayette
University of Louisiana, Lafayette - FNAN 522 Module 3 Homework.Started on Sunday, 10 November 2019, 6:36 PM State Finished Completed on Sunday, 10 Novem ber 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 t...
a company has a risk free rate of 3 and a risk premium of 6 its tax rate is 35 wha
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University of Louisiana, Lafayette
FNAN 522
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FNAN522-020_860-202020
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%)
Question 1 A company has a risk free rate of 3% and a risk
Correct premium of 6%. Its tax rate is 35%. What is the
company's cost of debt?
Mark 1.00 out of
1.00
Select one:
a. 3.90%
b. 2.10%
c. 3.15%
d. 5.85%
Question 2 A company is thinking of issuing more
Correct common stock. Its stock's current market
price is $50 a share with an expected
Mark 1.00 out of
dividend annual one year from today of $3
1.00
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.
, Question 3 A company has retained earnings of $1.5
Correct million and net income of $8 million. What
is the retention ratio (expressed as a
Mark 1.00 out of
decimal)?
1.00
Select one:
a. 0.01875
b. 0.8125
c. 0.1875
d. 0.08125
Your answer is correct.
Question 4 A company makes an initial $10,000
Correct investment in a project. This project is
projected to earn $8000 in year one,
Mark 1.00 out of
$10,000 in year 2, $12,000 in year 3, and
1.00
$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.
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