Identify this red vessel labeled ‘B’ (Indicate left or right)  

Name one of the hormones produced by the ‘islets of langerhans’ in the organ labeled ‘A’  

Identify the large red vessel labeled ‘A’  

Monetta, Inc, has no debt, but is considering borrowing for the first time to finance a three-year project. The company currently has an unlevered cost of capital of 12 percent and a 30 percent tax rate. The project requires an initial investment of $2.1 million, which will be straight-line depreciated over the three-year project life. The project, which is as risky as the firm’s current projects, is expected to generate earnings before depreciation of $1,050,000 per year for the three years. The capital for the initial investment will be raised with a loan for the full amount. The loan’s interest rate is 9 percent (which is also the current risk-free rate) and the principal will be repaid in one balloon payment at the end of the third year. What is the APV of the loan?

The 10-year loan for a project we are evaluating requires $300,000 in flotation costs. These costs can be straight-line amortized over the life of the loan. If our cost of debt is 9 percent and our tax rate is 25 percent, what is the NPV of the flotation costs?

Monetta, Inc, has no debt, but is considering borrowing for the first time to finance a three-year project. The company currently has an unlevered cost of capital of 12 percent and a 30 percent tax rate. The project requires an initial investment of $1.2 million, which will be straight-line depreciated over the three-year project life. The project, which is as risky as the firm’s current projects, is expected to generate earnings before depreciation of $600,000 per year for the three years. The capital for the initial investment will be raised with a loan for the full amount. The loan’s interest rate is 9 percent (which is also the current risk-free rate) and the principal will be repaid in one balloon payment at the end of the third year. What is the APV of the loan?

Southern Wind is an all-equity firm with 19,300 shares of stock outstanding and a total market value of $358,000. Based on its current capital structure, the firm is expected to have earnings before interest and taxes of $29,000 if the economy is normal, $16,400 if the economy is in a recession, and $41,600 if the economy booms. Ignore taxes. Management is considering issuing $89,800 of debt with an interest rate of 8 percent. If the firm issues the debt, the proceeds will be used to repurchase stock. What will the earnings per share be if the debt is issued and the economy booms?

The 10-year loan for a project we are evaluating requires $200,000 in flotation costs. These costs can be straight-line amortized over the life of the loan. If our cost of debt is 5 percent and our tax rate is 25 percent, what is the NPV of the flotation costs?

Monetta, Inc, has no debt, but is considering borrowing for the first time to finance a three-year project. The company currently has an unlevered cost of capital of 17 percent and  a 30 percent tax rate. The project requires an initial investment of $2.1 million, which will be straight-line depreciated over the three-year project life. The project, which is as risky as the firm’s current projects, is expected to generate earnings before depreciation of $1,050,000 per year for the three years. The capital for the initial investment will be raised with a loan for the full amount. The loan’s interest rate is 5 percent (which is also the current risk-free rate) and the principal will be repaid in one balloon payment at the end of the third year. What is the APV of the loan?

The 10-year loan for a project we are evaluating requires $275,000 in flotation costs. These costs can be straight-line amortized over the life of the loan. If our cost of debt is 7 percent and our tax rate is 25 percent, what is the NPV of the flotation costs?