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Question
When using the weighted average cost of capital (WACC) to discount cash flows from a project we assume the following:
I) the project's risk are the same as those of firm's other assets and remain so for the life of the project.
II) the project supports the same fraction of debt to value as the firm's overall capital structure that remains constant for the life of the project.
III) the cash flows from the project is always a perpetuity.
A. I only
B. II only
C. I and II only
D. I, II and III
Answer
This answer is hidden. It contains 15 characters.
Related questions
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Suppose VS's stock price is currently $20. In the next six months it will either fall to $10 or rise to $30. What is the current value of a put option with an exercise price of $15? The six-month risk-free interest rate is 5% (periodic rate).
A. $5.00
B. $2.14
C. $0.86
D. $7.86
Q:
Suppose Ralph's stock price is currently $50. In the next six months it will either fall to $30 or rise to $80. What is the option delta of a call option with an exercise price of $50?
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B. Lend PV of $50 and sell two calls
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One key assumption of the Miller and Modigliani (MM) dividend irrelevance argument is that:
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