McQuinty, Inc. has a beta of 1.34 and a marginal tax rate of 31%. The company has one bond issue outstanding with a total face value of $750,000. The bonds are currently quoted at 98.6. These bonds have seven years to maturity, a 6% coupon rate, and pay interest semi-annually. What is the after-tax cost of debt for McQuinty, Inc.?

A) 4.14%
B) 4.31%
C) 5.16%
D) 5.55%
E) 6.25%

The interest rate expressed as if it were compounded once per year is called the _____ rate.

A) Stated interest.
B) Compound interest.
C) Effective annual.
D) Periodic interest.
E) Daily interest.

The law of diminishing marginal returns results in average total cost eventually

A) increasing at a decreasing rate
B) decreasing at a decreasing rate.
C) decreasing at an increasing rate.
D) increasing at an increasing rate.

The full amount of a lease payment is tax deductible provided the contract qualifies as a true lease under CRA guidelines.

Lighthouse Corporation uses the NPV method for selecting projects,and it does a reasonably good job of estimating projects' sales and costs.However,it never considers real options that might be associated with projects.Which of the following statements is most likely to describe its situation?

A) Its estimated capital budget is probably too small, because projects' NPVs are often larger when real options are taken into account.
B) Its estimated capital budget is probably too large due to its failure to consider abandonment and growth options.
C) Failing to consider abandonment and flexibility options probably makes the optimal capital budget too large, but failing to consider growth and timing options probably makes the optimal capital budget too small, so it is unclear what impact not considering real options has on the overall capital budget.
D) Failing to consider abandonment and flexibility options probably makes the optimal capital budget too small, but failing to consider growth and timing options probably makes the optimal capital budget too large, so it is unclear what impact not considering real options has on the overall capital budget.

Straight commission plans are plans that

A) provide a straight salary to employees.
B) are useful when the organization wants salespeople to concentrate on listening to customers.
C) are used to attract risk-averse employees.
D) are common among insurance and real estate agents.
E) are uncommon among car salespeople.