1. Why might growing securitization make it harder for bank supervisors to keep track of risks to the financial system?
2. A corporation is considering a $250,000 investment, they expect the investment to generate yearly savings of $75,000 in savings over 5 years. The corporation’s cost of money is 12%. Should they make the investment on a NPV basis?
What is the project’s IRR?
3. A company reports Fixed Costs of $10,000, EBIT $5,000, Depreciation $3,000, taxes $2000. What is the Degree of Leverage, DOL?