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NEW QUESTION: 1
Interstate Transport has a target capital structure of 50 percent debt and 50 percent common equity. The firm is considering a new independent project which has an IRR of 13 percent and which is not related to transportation. However, a pure play proxy firm has been identified that is exclusively engaged in the new line of business. The proxy firm has a beta of 1.38. Both firms have a marginal tax rate of 40 percent, and Interstate's before-tax cost of debt is 12 percent. The risk-free rate is 10 percent, and the market risk premium is 5 percent. The firm should
A. Accept the project; its IRR exceeds the risk-free rate and the before-tax cost of debt.
B. Reject the project; its IRR is less than the firm's required rate of return on the project of 16.9 percent.
C. Be indifferent between accepting or rejecting; the firm's required rate of return on the project equals its expected return.
D. Accept the project; its IRR is greater than the firm's required rate of return on the project of 12.05 percent.
E. Reject the project; its IRR is only 13 percent.
Answer: D
Explanation:
Explanation/Reference:
Explanation:
Calculate the required return, k(s), and use to calculate the WACC:
k(s) = 10% + 1.38(5%) = 16.9%.
WACC = 0.5(12.0%)(0.6) + 0.5(16.9%) = 12.05%.
Compare expected project return, to WACC:
Accept the project since IRR (13%) is more than the WACC (12.05%).

NEW QUESTION: 2
Which two statements best describe an OSPF deployment?(Choose two.)
A. External routes are propagated into the autonomous system from regular areas or NSSA via ABR.
B. External routes are propagated into the autonomous system from stub areas via ASBR.
C. ABR provides automatic classful network boundary summarization.
D. External routes are propagated into the autonomous system from regular areas or NSSA via ASBR.
E. ABR requires manual configuration for classful network summarization.
Answer: D,E
Explanation:
Explanation/Reference:
Explanation: Refer to the link below, the protocol is designed to function that way. Link: http://
www.cisco.com/en/US/tech/tk365/technologies_white_paper09186a0080094e9e.shtml

NEW QUESTION: 3
On Cisco ASA Software Version 8.4.1 and later, when you configure the Cisco ASA appliance in transparent firewall mode, which configuration is mandatory?
A. ARP inspections
B. EtherType access-list
C. dynamic MAC address learning
D. static routes
E. NAT
F. bridge group(s)
Answer: F
Explanation:


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