67) Compute the payback period for a project with the following cash flows recei

Question

67) Compute the payback period for a project with the following cash flows received uniformly within each year:
Initial Outlay = $100
Cash Flows: Year 1 = $40
Year 2 = $50
Year 3 = $60
a. 2.17 years
b. 3 years
c. 4 years
d. 3.17 years

77) A company has preferred stock that can be sold for $28 per share. The preferred
stock pays an annual dividend of 5% based on a par value of $100.
Flotation costs associated with the sale of preferred stock equal $1.50 per
share. The company’s marginal tax rate is 35%. Therefore, the cost of preferred
stock is:
a. 18.87%
b. 17.86%
c. 11.61%
d. 12.26%

Explanation / Answer

67) a. 2.17 years 77) a. 18.87%

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