Question

Heather, a financial manager, considers whether to invest in a project that requires $50,000 for initial cost and will generate $12,000 a year for 7 years. What is her payback period?

Question options:

	3.91 years
	7.0 years
	5.22 years
	4.17 years

Use the following information for the next 2 questions:

Lilies Corp. provided information on their capital sources as followed.

• $52,500 in Debt: Their bonds have 30-year to maturity, 4% coupon and $1,000 par value. Current bond price is $980. Tax rate is 21%.
• $157,500 in Common stocks with current price of $140, most recent dividend of $3.50, and 9% growth rate.

56) What is their after-tax cost of debt?

Question options:

	4.12%
	3.25%
	5.19%
	1.56%

How much is their cost of capital?

Question options:

	11.28%
	15.97%
	9.61%
	2.86%

Answer 1