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37. No matter how many forms of investment analysis you employ:
38. Foamsoft sells customized boat shoes. Currently, it sells 16,850 pairs
of shoes annually at an average price of $79 a pair. It is considering adding
a lower-priced line of shoes which sell for $49
38. Which statement concerning the net present value (NPV) of an
investment or a financing project is correct?
36. The CAPM has an advantage over DDM because the CAPM:
37. For a firm to create value it must:
40. Marshall's purchased a corner lot five years ago at a cost of $498,000
and then spent $63,500 on grading and drainage so the lot could be used
for storing outdoor inventory. The lot was recently appraised at $610,000.
The company now wants to build a new retail store on the site. The building
cost is estimated at $1.1 million. What amount should be used as the initial
cash flow for this building project?
42. A proposed project costs $300 and has cash flows of $80, $200, $75,
and $90 for Years 1 to 4, respectively. Because of its high risk, the project
has been assigned a discount rate of 16 percent. In dollars, how much will
this project return in today’s dollars for every $1 invested?
45. What is the net present value of a project that has an initial cash
outflow of $7,670 and cash inflows of $1,280 in Year 1, $6,980 in Year 3,
and $2,750 in Year 4? The discount rate is 12.5 percent.