12. The ________ is the rate that o

12. The ________ is the rate that one can earn somewhere else if one did not invest in the project under evaluation.(a) opportunity cost of capital(b) cost of debt(c) cost of equity(d) weighted average cost of capitalAnswer: (a)13. You are trying to decide whether or not to buy a bond for $990 that will make one payment for $1,050 four years from today. What is the internal rate of return on the bond’s cash flows?(a) 1.06%(b) 1.48%(c) 10.6%(d) 14.8%Answer: (b)14. Calculate the NPV of the following cash flows: you invest $3,000 today and receive $300 one year from now, $700 two years from now, and $1,100 starting four years from now. Assume that the interest rate is 7%.(a) –$1,962.62(b) –$1,269.04(c) $1,269.04(d) $1,962.62Answer: (b)15. After each payment of an amortized loan, the outstanding balance is reduced by the amount of principal repaid. Therefore, the portion of the payment that goes toward the payment of interest is ________ than the previous period’s interest payment and the portion going toward repayment of principal is ________ than the previous period’s.(a) greater; lower(b) lower; lower(c) greater; greater(d) lower; greaterAnswer: (d)