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vinsu, Professor
Category: Finance
Satisfied Customers: 522
Experience:  MBA in Finance and Marketing
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Financial accounting

Customer Question

12. Cincinnati Machine Tools (CMT) accepts projects earning more than the firm’s 15% cost of capital. CMT is currently considering a 10 year project that provides annual cash inflows of $10,000 and requires an initial payment of $61,450. The net present value of the project at 15% is -$9,793. What is the IRR of this project? All stated amounts are after taxes.
a.       12%
b.      14%
c.       10%
d.      15%

13. The capital asset pricing model does not use the following factor:
a.       a stock’s beta
b.      a stock’s dividend values
c.       a stock’s growth rate
d.      A company’s corporate governance policies.
14. The U.S. Steel Company has earnings of $2 million and 500,000 shares of common stock currently valued at $60 per share. What is the firm’s earnings per share (EPS) and price/earnings (P/E) ratio?
a.       $2 EPS and P/E of 15
b.      $4 EPS and P/E of 60
c.       $4 EPS and P/E of 15
d.      $15 EPS and P/E of 4
15. The Canadian operations of the Coffee Company of Seattle was $500,000 Canadian. Assuming that the exchange rate for converting Canadian currency to U.S. currency is 80%, how would the Seattle Coffee Company, A U.S corporation, report its Canadian operations?
a.       report $500,000 in earnings
b.      report $400,000 in earnings
c.       report $625,000 in earnings
d.      not report the Canadian earnings

Submitted: 11 years ago.
Category: Finance
Expert:  vinsu replied 11 years ago.

12c. The IRR is 10%. Can be calculated using IRR function of excel

13 d. The corporate governance policies

14c. The EPS is(NNN) NNN-NNNN500000 = 4 and P/E = 60/4=15

15b. Convert the Canadian Dollar to US Dollar at the prevailing exchange rate