1. What is capital budgeting? What are the differences between screening decisions and preference decisions? Do you ever have occasion to make capital budgeting decisions in your personal life?
2. One objective of central banking is low and stable inflation. Low inflation is generally a better target than zero inflation since deflation has additional disadvantages. Describe one of the problems deflation creates.
3. Sixx AM Manufacturing has a target debt-equity ratio of 0.57. Its cost of equity is 15 percent, and its cost of debt is 7 percent. If the tax rate is 40 percent, what is the company's WACC?