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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
1. Epiphany is an all -equity firm within an estimated market value $300,000. The firm sells $100,000 of debt and uses the proceeds to purchase outstanding equity. Compute the weight in equity and the weight in debt after the proposed financing and repurchase of equity.
A. 0.17, 0.83
B. 0.2, 0.8
C. 0.67, 0.33
D. 0.23, 0.77
2. The Sisyphean Company is planning on investing in a new project. This will involve the purchase of some new machinery costing $440,000. The Sisyphean Company expects cash flows from this projects as a detailed below:
Year 1 Year 2 Year 3 Year 4
$200,000 $225,000 $275,000 $200,000
The appropriate discount rate for this project is 18%. The Net Present Value for this project is closet to:
A. $404,036
B. $113,130
C. $169,695
D. $161,614
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