Purchase Solution

# Yield to maturity and coefficient of variation, IRR

Not what you're looking for?

30. A project's cash flows have a beta of 1.2, a standard deviation of \$200, and a coefficient of variation of 0.40. What is the expected cash flow?

a) \$80
b) \$167
c) \$240
d) \$500

37. The coupon rate on a debt issue is 12%. If the yield to maturity on the debt is 9.33%, what is the after-tax cost of existing debt if the firm's tax rate is 34%?

a) 3.17%
b) 4.08%
c) 6.16%
d) 7.92%

38. Assume a project has earnings before depreciation and taxes of \$10,000, depreciation of \$40,000, and that the firm has a 30 percent tax bracket. What are the after-tax cash flows for the project?

a) \$47,000
b) \$19,000
c) a loss of \$21,000
d) none of the above

39. You require an IRR of 13% to accept a project. If the project will yield \$10,000 per year for 6 years, what is the maximum amount that you would be willing to invest in the project?

a) less than \$25,000
b) more than \$25,000 and less than \$30,000
c) more than \$30,000 and less than \$35,000
d) more than \$35,000

##### Solution Summary

This solution is comprised of a detailed explanation to answer what is the expected cash flow, what is the after-tax cost of existing debt if the firm's tax rate is 34%, what are the after-tax cash flows for the project, and what is the maximum amount that you would be willing to invest in the project.

##### Solution Preview

30. A project's cash flows have a beta of 1.2, a standard deviation of \$200, and a coefficient of variation of 0.40. What is the expected cash flow?

a) \$80
b) \$167
c) \$240
d) \$500

Coefficient of variation = Standard deviation/Mean
0.40 = 200/Mean
Mean = 500

37. The coupon rate on a debt issue is 12%. If the yield to maturity on the debt is 9.33%, what is the after-tax cost of existing debt if the firm's tax rate is 34%? ...

##### Measures of Central Tendency

Tests knowledge of the three main measures of central tendency, including some simple calculation questions.

##### Measures of Central Tendency

This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.