Problem 1: Single- and Multiple-Choice Questions (22 points)…

Problem 1: Single- and Multiple-Choice Questions (22 points)   f) Single-choice question: If a project requires an initial investment of $80,000 and is expected to generate cash flows of $20,000 per year for 5 years, what is the payback period? Please select the correct solution. (1 point)

Problem 1: Single- and Multiple-Choice Questions (22 points)…

Problem 1: Single- and Multiple-Choice Questions (22 points)   This problem comprises 10 single- and multiple-choice questions. The number of points that you can earn in a question range from one to three points and is always shown at the end of the question. In single-choice questions, you get the full number of points if you select the correct answer. Otherwise, you get zero points. In multiple-choice questions, you get one point for each correct answer and minus one point for each incorrect answer. You cannot earn less than zero points in a question. If you do not answer a question, you will get zero points for the question. a) Multiple-choice question: Assume that there is a convertible bond with a face value of $1,000. It can be converted into 250 shares. The current share price is . What is the absolute and the relative conversion premium? Are investors willing to convert their bonds into shares in this situation? (3 points)

Problem 6: Miscellaneous topics including debt prospectuses,…

Problem 6: Miscellaneous topics including debt prospectuses, IPO activity and underpricing, risk-return relation, capital budgeting, and capital structure (22 points) d) Charline, a colleague of yours, must evaluate several mutually exclusive investment projects that require different amounts of initial investment. Charline computes the internal rate of return (IRR) of all projects and then recommends the project with the highest IRR to be implemented. More specifically, she argues that, by picking the project with the highest IRR, the firm’s value will be maximized. There are two subquestions about this setting: (4 points in total) Do you agree with her assessment? Explain your answer. (2 points) Independent of your answer to the first subquestion, what would be necessary conditions for being able to use the IRR to maximize firm value when selecting between mutually exclusive investment projects? Explain your answer. (2 points)

Problem 5 – Excel: Weighted Average Cost of Capital and Capi…

Problem 5 – Excel: Weighted Average Cost of Capital and Capital Structure (9 points) Download the attached Excel file “Problem_5_Template.xslx” and answer the questions stated in the Excel file: Problem_5_Template.xlsx When you have completed your solutions, please upload the Excel file with your solutions to your e-exam using the name “StudentID_Problem_5.xslx” (e.g., “123456789_Problem_5.xlsx”). When you want to upload an updated version of your solutions, please add a version tag (e.g., “_v2”) at the end of the file name (e.g., “123456789_Problem_5_v2.xlsx”). This problem consists of three parts. Parts a), b), and c) yield 2, 4, and 3 points, respectively.