Top-Down, Inc

question 326

Multiple Choice

Top-Down, Inc. finances its operations using $1.50 of debt for every $2 of common stock. The pre- tax cost of debt is 7.5 percent, the cost of equity is 11 percent, and the tax rate is 34 percent.
Currently, the firm is considering a small project that it considers to be equally as risky as the overall
firm) The project has an initial cash outlay of $18,500 and is expected to have a single cash inflow
Of $25,000 at the end of year two. What is the net present value of this project?

• A) $2,107
• B) $2,350
• C) $2,773
• D) $2,807
• E) $2,835

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Definitions:

Diastole

Relaxation phase of the cardiac cycle.

Cardiac Cycle

The sequence of events that occurs in the heart during one heartbeat, including contraction (systole) and relaxation (diastole) of the atria and ventricles.

Valve

A device or structure that regulates, directs, or controls the flow of a fluid by opening, closing, or partially obstructing pathways.

Plasma Proteins

Proteins present in blood plasma, responsible for various functions including clotting, defence against pathogens, and transport of substances.