Which of the following is correct

Question 12pts Which of the following is correct?NPV will be higher if sunk costs are included in a project’s cash flowsA good example of a sunk cost is a situation where a company builds a restaurant and that results in lower sales by another of its restaurants.A good example of a sunk cost is a situation where a company builds a restaurant and closes another of its restaurants.A good example of a sunk cost is a situation where a company evaluated a site for a new restaurant last year, expensed the cost on its income statement, and now builds the restaurantnone of the aboveFlag this QuestionQuestion 22pts TUNDRA Corporation’s stock sells for $50 per share. A call option on the stock has a strike price of $55. A put option on the stock also has a strike price of $55. Which of the following is correct?The call option is in-the-moneyThe put option is in-the-moneyBoth the call option and the put option are out-of-the moneyThe call option has a value of $5none of the aboveFlag this QuestionQuestion 32ptsSkip to question text.A firm plans to purchase equipment for $1.5 million. It will cost 200,000 to modify it for use in the firm’s facility. The equipment is in the 3-year MACRS class. Calculate depreciation expense for Year 3.222,150$251,770$566,667$500,000none of the aboveFlag this QuestionQuestion 42pts A proposed project is much riskier than average. The best way to account for its added risk is:Ignoring it because project risk cannot be measured accurately.Decreasing the discount rate to account for the higher riskIncreasing the discount rate to account for the higher riskReducing the NPV by 5% to account for the higher risknone of the aboveFlag this QuestionQuestion 52ptsSkip to question text.A company needs to decide whether to invest in a project now or wait a year until better information is available. The project has a positive expected NPV, but it could be negative if cash flows are less than expected. No competitors are likely to invest in a similar project if the company decides to wait. Which of the following best describes the issues the company is facing in making its decision?The more uncertainty about the future cash flows, the more reason to go ahead with the project today.NPV should be even higher by waiting a year, since it is positive today.The project should be adopted now to lock in the expected positive NPV.Waiting would probably reduce the project’s risk.none of the aboveFlag this QuestionQuestion 62pts A stock is currently selling for $25. A 6-month call option on the stock has a strike price of $30 and sells for $0.50. Calculate the exercise value of the option?$0.00$4.50$5.00$24.50none of the aboveFlag this QuestionQuestion 72pts Which of the following is not areal option?The option to switch the type of vehicle manufactured in a plantThe option to expand into a foreign countryThe option to buy shares of stock if its price goes up.The option to abandon a project.none of the aboveFlag this QuestionQuestion 82ptsSkip to question text. The current price of a stock is $22, and at the end of one year its price will be either $27 or $17. The annual risk-free rate is 6.0%, based on daily compounding. A 1-year call option on the stock, with an exercise price of $22, is available. Based on the binominal model, what is the option’s value?$2.99$2.70$2.43$3.29$3.62Flag this QuestionQuestion 92pts A company purchases equipment for $5 million, incurs shipping costs of $30,000 and installation costs of $50,000. It also requires additional net working capital of $100,000. What is the depreciable base?$5,000,000$5,180,000$5,080,000$5,030,000none of the aboveFlag this QuestionQuestion 102pts Which of the following is an example of arealoption?An option to buy stock at a specified price for a specified period of timeAn option to sell stock at a specified price for a specified period of timeAn option to invest in a project today or to wait a year.An option to buy either an American or European optionnone of the above