Question

11. True or False (20 points, 2 point each) 23 4567910 No. 1. Marginal cost is based on the principle that an additional unit of production wiln only entail an increase in the fixed costs and that the variable costs will not be affected 2. The greater the balance you have in your account, the slower your savings will grow 3. In case of capital rationing, we should accept project with the highest positive NPV 4. Interest Rate measures the coupon payment as a percentage of the bond's face value 5. As long as investors agree about a firm's prospects, they will also agree on the value 6. If investors believe a company will have the opportunity to make every profitable 7. When we use the Constant-Growth Dividend Discount Model to caleulate the The interest rate is fixed when the bond is issued of the stock. investment in the future, they will pay more for the company's stock today current share price, the growth rate must exceed the discount rate 8. Money today is worth more than money in the future because you can invest money today and earn interest on it. 9. In order to have a permission to go ahead with your investing project, you need to draw up a detailed proposal setting out particulars of the project, cash-flow forecasts, and present value calculation, all these are about Capital Budget. 10. The decisions rule for investment timing is to choose the investment date that produces the highest net present value today 得分 III. Calculation (30 points) 1. (15 points) Your grandfather has offered you a choice of one of the three following alternatives: $4500 now; $1000 at the beginning of each period for six years, or $8000 at the end of six years. Assuming you could earn 12% annually 第6页共10页

Answer 1