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NEW QUESTION: 1
DQZ Telecom is considering a project for the coming year, which will cost $50 million. DQZ plans to use
the following combination of debt and equity to finance the investment.
. Issue $15 million of 20-year bonds at a price of 101, with a coupon rate of 8 percent, and flotation costs
of 2 percent of par.
. Use $35 million of funds generated from earnings.
The equity market is expected to earn 12 percent. U.S. treasury bonds are currently yielding 5 percent.
The beta coefficient for DQZ is estimated to be .60. DQZ is subject to an effective corporate income tax
rate of 40 percent.
The before-tax cost of DQZ's planned debt financing, net of flotation costs, in the first year is:
A. 8.08 percent.
B. 7.92 percent.
C. 11.80 percent.
D. 10.00 percent.
Answer: A
Explanation:
Choice "b" is correct. 8.08 percent before-tax cost of debt financing, net of flotation costs.
NEW QUESTION: 2
You can analyze data on Cascade Pilot received from live interfaces iF. (Select 2)
A. Cascade Shark is configured to show capture ports.
B. Cascade Pilot is started with administrator privileges.
C. You apply a View to the interface and create a Watch on Web traffic.
D. You have privileges to do so in your user profile.
Answer: B,D
NEW QUESTION: 3
One reason for charging management fees to subsidiaries is to:
A. help reduce the variability of parent and subsidiary future cash flow.
B. justify to local governments the flow of funds to the parent company.
C. minimize the impact of call provisions generally associated with overseas investing.
D. mitigate shareholder concerns about the large investments needed for overseas ventures.
Answer: B
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