Principles of Finance
Test Preparation
Course Introduction
Principles of Finance provides students with a comprehensive introduction to the fundamental concepts and tools used in financial management. The course covers key topics such as the time value of money, risk and return, valuation of stocks and bonds, capital budgeting, cost of capital, and financial statement analysis. Emphasis is placed on understanding how individuals and organizations make investment and financing decisions, the functioning of financial markets, and the role of financial institutions. By applying basic quantitative and analytical techniques, students gain the skills necessary to evaluate financial alternatives and make informed financial decisions in both personal and professional contexts.
Recommended Textbook
Corporate Finance 3rd Canadian Edition by Jonathan Berk
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31 Chapters
2210 Verified Questions
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Page 2
Chapter 1: The Corporation
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Sample Questions
Q1) Which of the following statements is false?
A) On the NASDAQ, stocks can and do have multiple market makers who compete with each other. Each market maker must post bid and ask prices in the NASDAQ network where they can be viewed by all participants.
B) Bid prices exceed ask prices.
C) Because customers always buy at the ask price and sell at the bid price, the bid-ask spread is a transaction cost investors have to pay in order to trade.
D) On the floor of the NYSE, market makers (known on the NYSE as specialists) match buyers and sellers.
Answer: B
Q2) In 2011 what position was the Toronto Stock Exchange,TSX,ranked based on the value of trades in U.S.dollars?
A) The 10th position
B) The 8th position
C) The 20th position
D) None of the above
Answer: A
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3
Chapter 2: Introduction to Financial Statement Analysis
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Sample Questions
Q1) How many reasons are there that net income does not correspond to cash earned?
Answer: There are two reasons that net income does not correspond to cash earned.First,there are non-cash entries on the income statement,such as depreciation and amortization.Second,certain uses of cash,such as the purchase of a building or expenditures on inventory,are not reported on the income statement.
Q2) What is Luther's net working capital in 2005?
A) $12 million
B) $27 million
C) $39 million
D) $63.6 million
Answer: A
Q3) Which of the following adjustments is NOT correct if you are trying to calculate cash flow from financing activities?
A) Add dividends paid.
B) Add any increase in long-term borrowing.
C) Add any increase in short-term borrowing.
D) Add proceeds from the sale of stock.
Answer: A
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Chapter 3: Arbitrage and Financial Decision Making
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Sample Questions
Q1) Suppose that Bondi Inc.is a Canadian holding company that owns both Pizza Hut and Kentucky Fried Chicken Franchised Restaurants.If the value of Bondi is $130 million,and the Pizza Hut Franchises are worth $70 million,then what is the value of the Kentucky Fried Chicken Franchises?
A) $60 million
B) $70 million
C) $130 million
D) Unable to determine with the information provided.
Answer: A
Q2) Which of the following statements regarding value additivity is false?
A) The value of a portfolio is equal to the sum of the values of its parts.
B) The price or value of the entire firm is equal to the sum of the values of all projects and investments within the firm.
C) To maximize the value of the entire firm, managers should make decisions that maximize NPV.
D) Value additivity does not have important consequences for the value of the entire firm, only for portfolios of firms.
Answer: D
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Chapter 4: The Time Value of Money
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Sample Questions
Q1) Consider a growing perpetuity that will pay $100 in one year.Each year after that,you will receive a payment on the anniversary of the last payment that is 6% larger than the last payment.This pattern of payments will continue forever.If the interest rate is 11%,then the value of this perpetuity is closest to:
A) $1,667
B) $588
C) $2,000
D) $909
Q2) The future value at retirement (age 65)of your savings is:
Q3) Net Present Value can be calculated for any time period provided that
A) both the interest rate and the time period correspond to the period being examined.
B) the interest rate is stipulated as an annual percentage but the time period corresponds to the period being examined.
C) the time period is stipulated as an annual period but the interest rate corresponds to the period being examined.
D) a spreadsheet is used for the calculation since this cannot be computed on a financial calculator.
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Chapter 5: Interest Rates
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Q1) The term structure of risk-free Canadian interest rates provides the yield curve that can be used to compute
A) present value of a risk-free cash flow over different investment horizons.
B) future value of a risk-free cash flow over different investment horizons.
C) both present and future values of a risk-free cash flow over different investment horizons.
D) none of the above.
Q2) Assuming that you have made all of the first 24 payments on time,then the outstanding principal balance on your SUV loan is closest to:
A) $31,250
B) $20,300
C) $19,200
D) $32,000
Q3) The Bank of Canada determines very short-term interest rates through its influence on
A) the overnight rate.
B) the nominal interest rate.
C) the real interest rate.
D) the effective annual rate.
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Page 7
Chapter 6: Valuing Bonds
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Sample Questions
Q1) The percentage change in the price of the bond "A" if its yield to maturity increases from 5% to 6% is closest to:
A) -4%
B) -6%
C) -1%
D) 4%
Q2) A 4-year default-free security with a face value of $1,000 and an annual coupon rate of 5.25% will trade
A) at a premium.
B) at par.
C) at a discount.
D) There is insufficient information provided to answer this question.
Q3) In December 2008 in the US,Treasury Bills traded with a negative yield. To profit from this anomoly,investors could have been expected to
A) sell T-Bills to materialize a profit over the life of the investment.
B) buy T-Bills to materialize a profit over the life of the investment.
C) continue to hold their investments until maturity.
D) continue to hold their investments but sell prior to maturity.
Q4) What is the relationship between a bond's price and its yield to maturity?
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Chapter 7: Valuing Stocks
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Sample Questions
Q1) Which of the following statements is false?
A) We cannot use the general dividend discount model to value the stock of a firm with rapid or changing growth.
B) As firms mature, their growth slows to rates more typical of established companies.
C) The dividend discount model values the stock based on a forecast of the future dividends paid to shareholders.
D) The simplest forecast for the firm's future dividends states that they will grow at a constant rate, g, forever.
Q2) What are some implicit assumptions that are made when valuing a firm using multiples based on comparable firms?
Q3) In the discounted free cash flow model,we assume that
A) we are focusing on the present value of all operating cash flows.
B) we are focusing on the present value of all investing cash flows.
C) we are focusing on the present value of all financing cash flows.
D) we are focusing on the present value of all cash flows before any payments to debt or equity holders.
Q4) What are some common multiples used to value stocks?
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9
Chapter 8: Investment Decision Rules
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Sample Questions
Q1) Which of the following statements is false?
A) Problems can arise using the IRR method when the mutually exclusive investments have different cash flow patterns.
B) The IRR is affected by the scale of the investment opportunity.
C) Multiple incremental IRRs might exist.
D) The incremental IRR rule assumes that the riskiness of the two projects is the same.
Q2) Which of the following statements is false?
A) About 75% of firms surveyed used the NPV rule for making investment decisions.
B) If you are unsure of your cost of capital estimate, it is important to determine how sensitive your analysis is to errors in this estimate.
C) To decide whether to invest using the NPV rule, we need to know the cost of capital.
D) NPV is positive only for discount rates greater than the internal rate of return.
Q3) If the discount rate for project A is 16%,then what is the NPV for project A?
Q4) If the discount rate for project B is 15%,then what is the NPV for project B?
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Chapter 9: Fundamentals of Capital Budgeting
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Sample Questions
Q1) According to the Canadian Revenue Agency (CRA),the "half year rule" in Capital Cost Allowance is only applied in
A) the whole life of the assets after they are purchased.
B) the first year after the assets are purchased.
C) every year after the assets are purchased.
D) the last year of the life of the assets.
Q2) To calculate the annual Capital Cost Allowance (CCA),Canadian firms must first determine the
A) earning year.
B) fiscal year.
C) budgeting year.
D) tax year.
Q3) The CCA tax shield is nothing more than a growing perpetuity with a growth rate equal to
A) a negative percentage.
B) a positive percentage.
C) zero.
D) none of the above.
Q4) What is sensitivity analysis?
Q5) What is the NPV of Epiphany's project?
11
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Chapter 10: Capital Markets and the Pricing of Risk
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Sample Questions
Q1) Which of the following statements is false?
A) Beta measures the sensitivity of a security to market-wide risk factors.
B) Volatility measures total risk, while beta measures only systematic risk.
C) The beta is the expected percentage change in the excess return of the market portfolio for a 1% change in the excess return of a security.
D) Utilities tend to be stable and highly regulated, and thus are insensitive to fluctuations in the overall market.
Q2) Suppose that Luther Corporation's beta is 0.9.If the market risk premium is 8% and the risk-free interest rate is 4%,then then expected return for Luther stock is:
A) 7.6%
B) 11.6%
C) 11.2%
D) 12.9%
Q3) The variance of the returns on the S&P 500 from 1996 to 2005 is closest to:
A) 0.0450
B) 0.3400
C) 0.1935
D) 0.0375
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Chapter 11: Optimal Portfolio Choice and the Capital Asset Pricing Model
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Sample Questions
Q1) The volatility on Lowes' returns is closest to:
A) 35%
B) 10%
C) 13%
D) 42%
Q2) The weight on Lowes in your portfolio is:
A) 40%
B) 20%
C) 50%
D) 30%
Q3) Which of the following statements is false?
A) A stock's return is perfectly positively correlated with itself.
B) When the covariance equals 0, the stocks have no tendency to move either together or in opposition to one another.
C) The closer the correlation is to -1, the more the returns tend to move in opposite directions.
D) The variance of a portfolio depends only on the variance of the individual stocks.
Q4) Calculate the covariance between Home Depot's and IBM's returns.
Q5) Calculate the correlation between Home Depot's and IBM's returns.
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Chapter 12: Estimating the Cost of Capital
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Q1) The reason that the Air Transportation Safety and System Stabilization Act,which established the Air Transportation Stabilization Board (ATSB)in the United States of America,gives the U.S.carriers an advantage over Canadian carriers is because
A) the act enables the U.S. carriers to obtain loans at the same level of interest rate as Canadian air carriers.
B) the act enables the U.S. carriers to obtain loans at a lower interest rate than they would without the guarantee.
C) the act enables the U.S. carriers to obtain loans at the higher level of interest rate as Canadian air carriers.
D) the act breaks the advantages of interest rate that Canadian carriers have enjoyed for many years.
Q2) The unlevered cost of capital for Anteater Enterprises is closest to:
A) 10.1%
B) 9.5%
C) 9.9%
D) 10.3%
Q3) Describe two methods that can be used to estimate a firm's debt cost of capital.
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Page 14
Chapter 13: Investor Behaviour and Capital Market
Efficiency
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Sample Questions
Q1) Book-to-market ratio is the ratio of ________.
A) book value of assets to the market value of assets
B) book value of equity to the market value of equity
C) book value of debt to the market value of debt
D) book value of working capital to the market value of working capital
Q2) The market value for Chihuahua Corporation is closest to
A) $10.0 million.
B) $12.5 million.
C) $12.0 million.
D) $15.0 million.
Q3) Which of the following statements is false?
A) It is not actually necessary to identify the efficient portfolio itself. All that is required is to identify a collection of portfolios from which the efficient portfolio can be constructed.
B) Although we might not be able to identify the efficient portfolio itself, we know some characteristics of the efficient portfolio.
C) An efficient portfolio can be constructed from other diversified portfolios.
D) An efficient portfolio need not be well diversified.
Q4) Explain why the market portfolio proxy may not be efficient.
Page 15
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Chapter 14: Financial Options
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Sample Questions
Q1) The payoff to the holder of a put option is given by:
A) P = max(K - S, 0)
B) P= max(S - K, 0)
C) P = min(S - K, 0)
D) P = max(K, 0)
Q2) You pay $3.25 for a call option on Luther Industries that expires in three months with a strike price of $40.00.Three months later,at expiration,Luther Industries is trading at $41.00 per share.Your profit per share on this transaction is closest to?
A) -$1.00
B) $1.00
C) -$2.25
D) $2.25
Q3) ________,options on Canadian stocks and bonds were traded on the Montreal Exchange,which was centre of the Canadian Derivatives Exchange.
A) After 1999
B) Before 1973
C) After 2008
D) Before 2008
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Page 16
Chapter 15: Option Valuation
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Q1) Using risk-neutral probabilities,the calculated price of a one-year call option on KD stock with a strike price of $20 is closest to:
A) $1.45
B) $2.40
C) $2.00
D) $2.15
Q2) ________ have the highest expected returns and ________ have the lowest expected returns.
A) Out-of-the-money calls; out-of-the-money puts
B) In-the-money puts; out-of-the-money puts
C) Out-of-the-money puts; out-of-the-money calls
D) In-the-money calls; out-of-the-money puts
Q3) Assuming the beta on KD stock is 1.1,the calculated beta for a one-year call option on KD stock with a strike price of $20 is closest to:
A) -1.8
B) 2.4
C) -7.7
D) 4.6
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17
Chapter 16: Real Options
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Q1) Which of the following statements is false?
A) Often, the decision to abandon a project entails costs, which may be either positive or negative.
B) Mortgage interest rates are higher than Treasury rates because mortgages have an abandonment option that Treasuries do not have; you can prepay your mortgage at any time, while the Canadian government can repay its debt only according to the schedule outlined in the bond contract.
C) A popular option gives holders of the bond the option to convert the bond into equity. These kinds of bonds are termed callable bonds.
D) More often than not, there is an opportunity cost of abandoning a project: if you shut down the project and later decide to start it up again, you have to pay the costs of restarting the project.
Q2) Assume that you are not able to sell the plant,but you are able to shut down the plant at no cost at any time.Draw a decision tree detailing this problem.
Q3) Assuming that Kinston has the ability to sell the prototype in year one for $300,000,draw a decision tree detailing the Kinston Industries Mountain Bike Project.
Q4) Describe the two factors that affect the value of an investment timing option?
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18
Chapter 17: Capital Structure in a Perfect Market
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Q1) Prior to any borrowing and share repurchase,RC's EPS is closest to:
A) $0.60
B) $1.00
C) $1.20
D) $0.50
Q2) Suppose that to raise the funds for the initial investment the firm borrows $40,000 at the risk free rate and issues new equity to cover the remainder.In this situation,the cash flow that equity holders will receive in one year in a strong economy is closest to:
A) $117,000
B) $75,000
C) $50,000
D) $0
Q3) If Rockwood finances their expansion by issuing $100 million in debt at 5%,what will Rockwood's cost of equity capital be?
A) 11.25%
B) 10.70%
C) 12.50%
D) 12.00%
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Chapter 18: Debt and Taxes
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Q1) The value of a firm is the total amount it can raise from ________.
A) all investors
B) creditors
C) shareholders
D) stakeholders
Q2) If Flagstaff currently maintains a .5 debt to equity ratio,then the value of Flagstaff's interest tax shield is closest to:
A) $11 million
B) $18 million
C) $10 million
D) $24 million
Q3) Rosewood's net income is closest to:
A) $450 million
B) $180 million
C) $290 million
D) $95 million
Q4) If Flagstaff currently maintains a .8 debt to equity ratio,then calculate the value of Flagstaff's interest tax shield.
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Page 20
Chapter 19: Financial Distress, managerial Incentives, and Information
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Sample Questions
Q1) The value of Luther with leverage is closest to:
A) $315 million
B) $340 million
C) $205 million
D) $300 million
Q2) Suppose that MI has zero-coupon debt with a $125 million face value due next year.The total value of MI with leverage is closest to:
A) $133 million
B) $140 million
C) $147 million
D) $125 million
Q3) An under-investment problem suggests that shareholders choose to not invest in a ________ project.
A) zero-NPV
B) negative-NPV
C) positive-NPV
D) none of the above
Q4) List five general categories of indirect costs associated with bankruptcy.
Page 21
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Chapter 20: Payout Policy
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Q1) The price of a share of JRN's stock is closest to:
A) $20.00
B) $24.00
C) $25.00
D) $18.00
Q2) Assume that Rockwood is not able to repurchase shares prior to the market becoming aware of the new information regarding Rockwood's true value.If Rockwood repurchases the shares following the release of the new information,then the number of shares outstanding following the repurchase is closest to:
A) 92 million
B) 90 million
C) 75 million
D) 10 million
Q3) Using the available tax information for 2002,calculate the effective dividend tax rate for a:
(1)one-year individual investor
(2)buy and hold individual investor
(3)pension fund
Q4) Calculate the effective tax disadvantage for retaining cash in 1999,2001,and 2005.
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Chapter 21: Capital Budgeting and Valuation With Leverage
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Q1) The unlevered cost of capital for Anteater Enterprises is closest to:
A) 10.1%
B) 9.5%
C) 9.9%
D) 10.3%
Q2) Luther Industries is considering borrowing $500 million to fund a new product line.Given investors' uncertainty regarding its prospects,Luther will pay a 7% interest rate on this loan.The firm's management knows that the actual risk of the loan is extremely low and that the appropriate rate on the loan is 5%.Suppose the loan is for four years,with all principal being repaid in the fourth year.If Luther's marginal corporate tax rate is 35%,then the net effect of the loan on the value of the new product line is closest to:
A) $22 million
B) $34 million
C) $35 million
D) $24 million
Q3) Given that Rose issues new debt of $50 million initially to fund the acquisition,the total value of this acquisition using the APV method is equal to:
Q4) Calculate the debt capacity of Omicron's new project for years 0,1,and 2.
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Chapter 22: Valuation and Financial Modelling: a Case Study
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Q1) If the risk-free rate of interest is 6% and the market risk premium has historically averaged 5%,then the cost of capital for Oakley is closest to:
A) 9.1%
B) 10.2%
C) 13.5%
D) 14.7%
Q2) Based upon the average P/E ratio of the comparable firms,Ideko's target market value of equity is closest to:
A) $157 million
B) $155 million
C) $193 million
D) $165 million
E) $191 million
Q3) As an intangible asset,goodwill is ________ over time as its value ________.
A) amortized; grows
B) not amortized; declines
C) amortized; declines
D) not amortized; grows
Q4) What is the purpose of the sensitivity analysis?
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Chapter 23: The Mechanics of Raising Equity Capital
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Q1) Which of the following statements is false?
A) In a rights offer, the firm offers the new shares only to existing shareholders.
B) Secondary shares are shares sold by existing shareholders, including the company's founder.
C) If a firm's management is concerned that its equity may be underpriced in the market, by using a rights offering the firm can continue to issue equity without imposing a loss on its current shareholders.
D) In the United States most offers are rights offers.
Q2) For many start-ups,the first round of outside private equity financing is often obtained from ________ which may also bring expertise to the firm that the entrepreneur lacks.
A) venture capital firms
B) angel investors
C) institutional investors
D) corporate investors
Q3) Based upon the price/earnings ratio,what would be a reasonable value for KD?
Q4) What will the proceeds from the IPO be if Luther is selling 1.1 million shares ?
Q5) What will the offer price of these shares be if Luther is selling 800,000 shares?
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Chapter 24: Debt Financing
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Q1) Suppose that in January 2001,the Canadian Treasury issued a ten-year inflation-indexed note with a coupon of 3 1/2%.On the date of issue the consumer price index (CPI)was 175.1.In January 2006,the CPI had increased to 198.3.What coupon payment was made on this bond in January 2006?
Q2) Which of the following statements is false?
A) The Government of Canada frequently issues strip bonds.
B) The Government of Canada frequently issues bonds through multiple-price auctions.
C) The Government of Canada frequently issues bonds through single-price auctions.
D) The Government of Canada frequently issues bonds through auctions in bond markets.
Q3) What kind of corporate debt has a maturity of less than 10 years?
A) Asset-backed bonds
B) Debentures
C) Notes
D) Mortgage bonds
Q4) What is the Yield to Maturity (YTM)on this bond?
Q5) What is the Yield to Call (YTC)on this bond?
Q6) What is the Yield to Maturity (YTM)on this bond?
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Chapter 25: Leasing
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Q1) Calculate the monthly lease payments for a four-year fixed price lease that allows the lessee to buy the bulldozer at the end of the lease for $8,000.
Q2) Calculate the monthly lease payments for a four-year $1.00 out lease of the bulldozer.
Q3) Which of the following statements is false?
A) Most financial analysts and sophisticated investors consider operating leases (which must be listed in the footnotes of the financial statements) to be additional sources of leverage.
B) By carefully avoiding the four criteria that define an operating lease for accounting purposes, a firm can avoid listing the long-term lease as a liability.
C) Because a lease is equivalent to a loan, the firm can increase its actual leverage without increasing the debt-to-equity ratio on its balance sheet.
D) For most large corporations, the amount of leverage the firm can obtain through a lease is unlikely to exceed the amount of leverage the firm can obtain through a loan.
Q4) If St.Martin purchases the CT scanner,what is the amount of the lease-equivalent loan?
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Page 27
Chapter 26: Working Capital Management
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Q1) Kinston Industries has an average accounts payable balance of $220,000.Its annual cost of goods sold is $5,475,000,and it receives terms of 2/10,net 30 from its suppliers.Kinston chooses to forgo this discount.Is Kinston managing its accounts payable well?
Q2) Which of the following money market investments is a draft written by the borrower and guaranteed by the bank on which the draft is drawn? It is typically used in international trade transactions.The borrower is an importer who writes the draft in payment for goods.
A) Treasury Bill
B) Repurchase Agreement
C) Certificates of Deposit (CD)
D) Banker's Acceptance
E) Commercial Paper
Q3) Luther's cash conversion cycle is closest to:
A) 51 days
B) 66 days
C) 71 days
D) 129 days
Q4) Calculate the number of days in Luther's Operating Cycle.
Q5) Describe "just-in-time" inventory management.
Page 28
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Chapter 27: Short-Term Financial Planning
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Q1) As LIBOR is a rate paid by banks with ________,most firms will borrow at a rate that ________ LIBOR.
A) the highest credit quality; is below
B) the lowest credit quality; exceeds
C) the lowest credit quality; is below
D) the highest credit quality; exceeds
Q2) In Canada,to extend the maturity of commercial paper beyond one year triggers registration requirements with ________.
A) the federal securities commission
B) the relevant provincial securities commission
C) the Ministry of Finance
D) the Toronto Stock Exchange (TSX)
Q3) A loan agreement that requires that the firm pay interest on the loan and pay back the principal in one lump sum at the end of the loan is called
A) a short-term mortgage loan.
B) a single, end-of-period-payment loan.
C) a bridge loan.
D) a line of credit.
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Chapter 28: Mergers and Acquisitions
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Q1) A key issue for takeovers is ________ and ________ the value added as a result of the merger.
A) qualifying; discounting
B) quantifying; compounding
C) qualifying; compounding
D) quantifying; discounting
Q2) A rights offering that gives existing target shareholders the right to buy shares in either the target or the acquirer at a deeply discounted price once certain conditions are met is called a
A) golden parachute.
B) poison pill.
C) classified board.
D) white knight.
Q3) A situation where every director serves a three-year term and the terms are staggered so that only one-third of the directors are up for election each year is called a A) white knight.
B) classified board.
C) poison pill.
D) golden parachute.
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Page 30
Chapter 29: Corporate Governance
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Q1) Which of the following statements is false?
A) A board is said to be classified when its monitoring duties have been compromised by connections or perceived loyalties to management.
B) Even the most active independent directors spend only one or two days per month on firm business, and many independent directors sit on multiple boards, further dividing their attention.
C) On a board composed of insider, gray, and independent directors, the role of the independent director is really that of a watchdog.
D) Because independent directors' personal wealth is likely to be less sensitive to performance than that of insider and gray directors, they have less incentive to closely monitor the firm.
Q2) Directors who are employees,former employees,or family members of employees are called
A) Managing Directors.
B) Independent Directors.
C) Inside Directors.
D) Gray Directors.
Q3) What is the difference between inside,gray,and outside directors?
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Chapter 30: Risk Management
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Q1) Which of the following statements regarding futures contracts is false?
A) Both the buyer and the seller can get out of the contract at any time by selling it to a third party at the current market price.
B) Futures prices are not prices that are paid today. Rather, they are prices agreed to today, to be paid in the future.
C) Futures contracts are traded anonymously on an exchange at a publicly observed market price and are generally very illiquid.
D) Traders are required to post collateral, called margin, when buying or selling commodities using futures contracts.
Q2) The Century 22 Fund has invested in a portfolio of mortgage-backed securities that has a current market value of $245 million.The duration of this portfolio of mortgage-backed securities is 14.7 years.The fund has borrowed to purchase these securities,and the current value of its liabilities (i.e.,the current value of the bonds Century 22 has issued)is $160 million.The duration of these liabilities is 5.4 years.What is the initial duration of the equity for the Century 22 fund?
Q3) What are some of the disadvantages of long-term supply contracts?
Q4) What is the actuarially fair cost of full insurance?
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Chapter 31: International Corporate Finance
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Q1) If the foreign tax rate is ________ the Canadian tax rate,the company pays total taxes ________ the Canadian tax rate on its foreign earnings.
A) greater than; equal to B) greater than; more than C) less than; equal to D) less than; less than
Q2) The present value of the £5 million cash inflow computed by first converting into dollars and then discounting is closest to:
A) $8,950,495
B) $8,954,615
C) $8,943,695
D) $8,961,420
Q3) The amount of the taxes paid in dollars for the Irish operations is closest to:
A) $20.5 million
B) $5.1 million
C) $29.5 million
D) $50.0 million
Q4) Calculate the pound denominated cost of capital for Luther's project.
Q5) What is the dollar present value of the project?
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