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A firm uses a single discount rate to compute the NPV of all its potential capital budgeting projects, even though the projects have a wide range of nondiversifiable risk. The firm then undertakes all those projects that appear to have positive NPV's. Briefly explain why such a firm would tend to become riskier over time.
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The total present value of all costs associated with an asset over a seven-year life is $73,285. If the asset has a cost of capital of 11%, what is the EAC of using this asset?
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Depreciation provides a sort of shield against taxes. If there were no taxes, there would be no depreciation tax shields. Does this mean that a project's NPV would be less if there were no taxes?
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Phyllis believes that the firm should use straight-line depreciation for a capital project because it results in higher net income during the early years of the project's life. Joanna believes that the firm should use the modified accelerated cost recovery system depreciation because it reduces the tax liability during the early years of the project's life. Assuming you have a choice between depr
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The required return on debt is 8%, the required return on equity is 14%, and the marginal tax rate is 40%. If the firm is financed 70% equity and 30% debt, what is the weighted average cost of capital?
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b. A firm uses a single discount rate to compute the NPV of all its potential capital budgeting projects, even though the projects have a wide range of nondiversifiable risk. The firm then undertakes all those projects that appear to have positive NPVs.
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a. What are the two factors on which present value depends?
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what is a 401K?
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You want to go to grad school 3 years from now, and you can save $5,000 per year, beginning one year from today. You plan to deposit the funds in a mutual fund which you expect to return 9% per year. Under these conditions, how much will you have just after you make the 3rd deposit, 3 years from now?
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I'm in the highest tax bracket already, is there any case in which it would make sense to convert to a Roth IRA?
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If I have several traditional IRAs can I convert only one or two of them to a Roth IRA?
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I’ve been putting money into a traditional ira without taking any deductions, does it still makes sense to covert to a roth?
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If I convert my traditional ira to a roth ira can I still contribute to my traditional ira?
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What penalties might I incur if I convert my traditional ira to a roth ira?
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Are certificate of deposits the least risky, safest investment?
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I have $100,000 in a 529 plan, but my son has decided not to attend college, what should I do?
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Should I put all my 401k money into gold?
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What does "guaranteed insurability" mean?
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Whole life vs term insurance, what is the difference?
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Do I have to pay taxes on an inheritance?
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What are the pros and cons of a payday loan or cash advance?
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What is ROI (Return on Investment) and how is ROI calculated?
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What would be a good starting amount of money I should invest to start some kind of retirement fund?
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What is the significance of municipal bonds paying higher interest rates than treasury bonds?
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403b contribution limits?
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