Use the data provided on Cadbury to answer the question below. The risk free rate is 4.25%. The expected return on the market portfolio is 9.75%
The corporate tax rate is 40%. The face value of Cadbury's outstanding bonds is 2.450 billion pounds sterling. The coupon rate on Cadbury's bonds is 4.5%. Assume that the bonds pay annual coupons. The yield to maturity on Cadbury's bonds is 4.5%. Cadbury's bonds mature in 7 years. Cadbury has 1.650 billion common shares outstanding. The market price of Cadbury's common shares as of Dec 31, 2008 is 6.25 pounds sterling. Cadbury's Beta is 0.8. What is Cadbury's cost of equity?
A) 4.20%
B) 4.40%
C) 7.80%
D) 8.65%
E) 8.70%
D
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Western Inc. purchases a machine for $15,000. This machine qualifies as a five-year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1 = 20.00%; year 2 = 32.00%; year 3 = 19.20%; year 4 = 11.52%
Western has a tax rate of 33%. If the machine is sold at the end of four years for $4,000, what is the cash flow from disposal? A) $3,535.36 B) $3,408.22 C) $2,592.00 D) $1,408.00
Which of the following is a benefit of online presentations?
A) Less backchanneling B) Better ability to read nonverbal cues C) Additional material can be sent after the presentation D) Communicating with a geographically dispersed audience E) There is less need to practice