4. Black Pearl Yachts is considering a project that requires a $180,000 cash outlay and is expected to produce cash flows of $50,000 per year
for the next five years. Black Pearl's tax rate is 25%, and the before-tax
cost of debt is 8%. The current share price for Black Pearl's stock is $56,
and the expected dividend next year is $2.80 per share. Black Pearl's
expected growth rate is 5%. Assume that Black Pearl finances the
project with 60% equity and 40% debt, and the flotation cost for equity
is 4.0%. The appropriate discount rate is the weighted average cost of
capital (WACC). Which of the following choices is closest to the dollar
amount of the flotation costs and the NPV for the project, assuming
that flotation costs are accounted for properly?
Dollar amount of flotation costs NPV of project
A. $4,320
$17,548
B. $4,320
$13,228
C. $7,200
$17,548

In year 1, the bennetts' 25-year-old daughter, jane, is a full-time student at an out-of-state university but she plans to return home after the school year ends. in previous years, jane has never worked and her parents have always been able to claim her as a dependent. in year 1, a kind neighbor offers to pay for all of jane's educational and living expenses. which of the following statements is most accurate regarding whether jane's parents would be allowed to claim an exemption for jane in year 1 assuming the neighbor pays for all of jane's support? a.no, jane must include her neighbor's gift as income and thus fails the gross income test for a qualifying relative.b.yes, because she is a full-time student and does not provide more than half of her own support, jane is considered her parent's qualifying child.c.no, jane is too old to be considered a qualifying child and fails the support test of a qualifying relative.d.yes, because she is a student, her absence is considered as "temporary." consequently she meets the residence test and is a considered a qualifying child of the bennetts.