Your Boss Would Like You to Evaluate a Project Which

question 65

Multiple Choice

Your boss would like you to evaluate a project which requires $164,000 in external financing. The flotation cost of equity is 12 percent and the flotation cost of debt is 5 percent. You wish to maintain
A debt-equity ratio of .55. What is the initial cost of the project including the flotation costs?

• A) $177,226
• B) $178,552
• C) $179,606
• D) $180,337
• E) $181,248

Recognize the role of technological advances in improving productive efficiency and altering the mix of goods.

Understand the difference between invention, innovation, and diffusion and their significance in technological progress.

Grasp the relevance of patents to inventions and innovations.

Differentiate between product and process innovations and their effects on firms' costs and revenues.

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Definitions:

Gold Futures

Contracts for the future delivery of gold at a specified price, used for hedging and investing purposes.

Arbitrage Profit

The profit made from buying and selling equivalent financial instruments or capitalizing on price differences in different markets to generate a risk-free return.

Risk-free Rate

The theoretical rate of return of an investment with zero risk, typically associated with government bonds.

Swap Market

A marketplace where parties exchange financial instruments, such as interest rates or currencies.