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NEW QUESTION: 1
Photon Corporation has a target capital structure of 60 percent equity and 40 percent debt. The firm can raise an unlimited amount of debt at a before-tax cost of 9 percent. The company expects to retain earnings of $300,000 in the coming year and to face a tax rate of 35 percent. The last dividend was $2 per share and the growth rate of the company is constant at 6 percent. If the company needs to issue new equity, then the flotation cost will be $5 per share. The current stock price is $30. Photon has the following investment opportunities:
Project Cost IRR
1 $100,000 10.5%
2 $200,000 13.0
3 $100,000 12.0
4 $150,000 14.0
5 $75,000 9.0
A. $625,000
B. $150,000
C. $350,000
D. $550,000
E. $450,000
Answer: E
Explanation:
Explanation/Reference:
Explanation:
Calculate the retained earnings break point (BPRE) as $300,000/0.6 = $500,000. Calculate ks as D1/P0 + g = $2(1.06)/$30 + 6% = 13.07%. Calculate ke as D1/(P0 - F) + g = $2(1.06)/($30 - $5) + 6% = 14.48%.
Find WACC below BPRE as: WACC = 0.6(13.07%)+ 0.4(9%)(1 - 0.35) = 10.18%. Thus, up to $500,000 can be financed at 10.18%. Find WACC above BPRE as: WACC = 0.6(14.48%) + 0.4 (9%) (1 - 0.35)
11.03%. Thus, financing in excess of $500,000 costs 11.03%. Projects 2, 3, and 4 all have IRRs exceeding either WACC and should be accepted. These projects require $450,000 in financing. Project 1 is the next most profitable project.
Given its cost of $100,000, half or $50,000 can be financed at 10.18% and the other half must be financed at 11.03%. The relevant cost of capital for Project 1 is then 0.5(10.18%) + 0.5(11.03%) = 10.61%. Since Project 1's IRR is less than the cost of capital, it should not be accepted. The firm's optimal capital budget is $450,000.
NEW QUESTION: 2
An application uses Amazon Kinesis Data Streams to ingest and process large streams of data records in real time. Amazon EC2 instances consume and process the data from the shards of the Kinesis data stream by using Amazon Kinesis Client Library (KCL). The application handles the failure scenarios and does not require standby workers. The application reports that a specific shard is receiving more data than expected. To adapt to the chnages in the rate of data flow, the "hot" shard is resharded.
Assuming that the initial number of shards in the Kinesis data stream is 4, and after resharding the number of shards increased to 6, what is the maximum number of EC2 instances that can be deployed to process data from all the shards?
A. 0
B. 1
C. 2
D. 3
Answer: B
Explanation:
Typically, when you use the KCL, you should ensure that the number of instances does not exceed the number of shards (except for failure standby purposes). Each shard is processed by exactly one KCL worker and has exactly one corresponding record processor, so you never need multiple instances to process one shard. However, one worker can process any number of shards, so it's fine if the number of shards exceeds the number of instances.
https://docs.aws.amazon.com/streams/latest/dev/kinesis-record-processor-scaling.html
NEW QUESTION: 3
An advantage of virtualizing servers, databases, and office applications is:
A. Stronger access control.
B. Centralized management.
C. Decentralized management.
D. Providing greater resources to users.
Answer: B
Explanation:
Virtualization consists of allowing one set of hardware to host multiple virtual Machines and in the case of software and applications; one host is all that is required. This makes centralized management a better prospect.
Incorrect Answers:
B. Virtualization does not necessarily mean providing greater resources to users, rather it makes it possible for the company to use fewer resources and spread it over more users.
C. Stronger access control is one aspect of the centralized management dilemma as virtualization may result in privilege escalation.
D. Decentralized management is the exact opposite of what virtualization accomplishes.
References:
Dulaney, Emmett and Chuck Eastton, CompTIA Security+ Study Guide, 6th Edition, Sybex, Indianapolis, 2014, p. 19
NEW QUESTION: 4
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Which command should you include in the recommendation? (To answer, select the appropriate options in the answer area.)
Hot Area:
Answer:
Explanation:
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