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1. On 8 February 2021, Teslas CEO and Technoking Elon Musk announced that Tesla had bought USD1.5 billion of Bitcoin.

Alyse Killeen said The announcement that Tesla has diversified its treasury through the addition of bitcoin is not surprising, nor is the assuredness implied by an 8% allocation of cash-on-hand. Equal to Teslas R&D expenditure for 2020, this investment is significant to the Company and shows a commitment to maximizing shareholder returns

Tesla invests heavily in research and development (R&D) and has never paid a dividend or conducted a share buyback. Which of the following statements is NOT correct?

Select one:

a.If shareholders thought Bitcoin was a better investment than Tesla, they would have bought Bitcoin themselves rather than Tesla stock.

b.Teslas Bitcoin investment is logical given its wide array of positive net present value electric car projects available to invest in.

c.Capital gains on Bitcoin realised by Tesla will be double taxed at the corporate and personal levels rather than just at the personal level if shareholders bought Bitcoin themselves personally.

d.Shareholders can just as easily diversify into Bitcoin themselves rather than hold shares in the diversified conglomerate Tesla that now holds electric-cars and Bitcoin.

2.You valued a publically listed firm using a DCF model with a perpetuity terminal value (TV). Your model-estimated share price is 10 times higher than the market-traded share price. How can you make your model-estimated share price closer to the market-traded share price? You can:

Select one:

a.Lower the required return or WACC.

b.Lower the beta of equity.

c.Lower the growth rate of the perpetuity terminal value.

d.Lower the market risk premium.

e.Lower the risk free rate.

3.Youre trying to find a companys terminal value of assets based on a perpetuity with growth, discounted by the weighted average cost of capital (WACC).

The companys home country is forecast to have 3% real GDP growth and 2% inflation for the foreseeable future. Which of the below statements is NOT correct? The companys terminal value perpetuity growth rate:

Select one:

a.In nominal terms must be less than or equal to the countrys 1% approximate nominal GDP growth rate, or else the company will eventually take over the country.

b.In real terms must be less than or equal to the countrys 3% real GDP growth rate, or else the company will eventually take over the country.

c.Must be zero in real terms if the firms cash flows are forecast to grow by 2% in nominal terms.

d.Must be less than the firms WACC, or else the perpetuity formula will give a negative price (though the company will be worth an infinite amount).

4. You just agreed to borrow $1 million to afford your dream home using a 30 year interest-only (IO) loan, paid monthly in arrears as is normal. You were offered a rate of:

2.4% pa compounded monthly by Strict Bank that required lots of documentation to prove your income and expenses, and a rate of;

3.6% pa compounded monthly by Loose Bank that required almost no documentation and was a pleasure to deal with.

You agreed to the more expensive rate loan with Loose Bank since you couldn't be bothered to gather the documentation, even though it would have only taken a moment. What was the net present value (NPV) of your decision to borrow using the more expensive interest rate compared to the cheaper one?

Select one:

a.-$142,317.49

b.-$165,932.60

c.-$232,934.34

d.-$256,448.81

e.-$360,000.00

Please answer all kindly...need serious help.. please answer all.

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