WGU C214 PA EXAM REVIEW QUESTIONS AND
CORRECT ANSWERS PLUS RATIONALE
GRADED A+ NEW UPDATE 2026-2027
49 QUESTIONS
TABLE OF CONTENTS
# TOPIC
1 Compute and interpret time value of money, bond, and equity valuation metrics
2 Evaluate capital investment projects using NPV, IRR, payback, and profitability index
3 Analyze financial statements and ratios to assess firm performance and risk
4 Determine the weighted average cost of capital and optimal capital structure
5 Apply working capital management techniques to optimize liquidity and profitability
6 WGU C214 PA Exam Review Questions and Correct Answers plus Rationale Graded A+ New Update
2026
7 2027
8 Foundations of Finance, Accounting, and Managerial Economics
9 Applied Finance, Accounting, and Managerial Economics
10 Advanced Finance, Accounting, and Managerial Economics
11 Finance, Accounting, and Managerial Economics Review
ABSTRACT
This study document brings together 49 carefully worded exam questions drawn from WGU C214
PA Exam Review Questions and Correct Answers plus Rationale Graded A+ New Update
2026-2027, with the strongest emphasis placed on Compute and interpret time value of money,
bond, and equity valuation metrics, Evaluate capital investment projects using NPV, IRR, payback,
and profitability index and Analyze financial statements and ratios to assess firm performance and
risk. Every item follows the wording style and level of reasoning you meet in the real paper, and
each one is paired with a clear rationale so the correct choice is never a guess. Work through the
set at your own pace, mark the questions that slow you down, then come back to them until the
reasoning feels automatic. Learners who revise this way walk into the exam room recognising the
pattern behind the questions instead of meeting them for the first time. Keep going - steady, honest
practice is what turns a difficult paper into a comfortable pass.
Page 1
,Q1 COMPUTE AND INTERPRET TIME VALUE OF MONEY, BOND, AND EQUITY VALUATION
METRICS
A firm has a beta of 1.4, the risk-free rate is 3%, and the market risk premium is
6%. The firm is considering a project with an expected return of 11.5%. According
to CAPM, should the firm accept the project?
A. Yes, because the expected return exceeds the required return.
B. No, because the required return is 11.4% and the expected return is only 11.5%.
C. No, because the required return is 11.4% and the expected return is 11.5%, so it is
acceptable but marginal. CORRECT
D. Yes, because the project's beta is irrelevant.
RATIONALE: Required return = 3% + 1.4(6%) = 11.4%. The expected return of 11.5% exceeds
the required return by 0.1%, so the project is acceptable but marginally so. Option B is incorrect
because it says 'No' despite the expected return exceeding the required return. Option A is too
absolute; the project barely exceeds the threshold. Option D is false because beta is central to
CAPM.
Q2 COMPUTE AND INTERPRET TIME VALUE OF MONEY, BOND, AND EQUITY VALUATION
METRICS
A company reports net income of $500,000, depreciation of $80,000, an increase in
accounts receivable of $30,000, and a decrease in accounts payable of $20,000.
What is the cash flow from operations using the indirect method?
A. $530,000 CORRECT
B. $570,000
C. $610,000
D. $550,000
RATIONALE: CFO = Net income + Depreciation - Increase in AR - Decrease in AP = $500,000 +
$80,000 - $30,000 - $20,000 = $530,000. Option B incorrectly adds the decrease in AP instead of
subtracting. Option C adds the increase in AR. Option D omits the AP adjustment.
Page 2
, Q3 COMPUTE AND INTERPRET TIME VALUE OF MONEY, BOND, AND EQUITY VALUATION
METRICS
A bond has a face value of $1,000, a coupon rate of 6% paid semiannually, and 10
years to maturity. If the yield to maturity is 8%, what is the bond's price?
A. $864.10 CORRECT
B. $1,000.00
C. $1,135.90
D. $927.50
RATIONALE: Semiannual coupon = $30, n=20, YTM per period=4%. Price = $30 * [1 -
(1.04)^-20]/0.04 + $1,000/(1.04)^20 = $864.10. Option B is the face value, ignoring the discount.
Option C is the price if the yield were lower than the coupon. Option D is a miscalculation.
Q4 COMPUTE AND INTERPRET TIME VALUE OF MONEY, BOND, AND EQUITY VALUATION
METRICS
A firm has a debt-to-equity ratio of 0.5, a tax rate of 30%, a cost of debt of 8%, and
a cost of equity of 12%. What is the weighted average cost of capital (WACC)?
A. 9.8% CORRECT
B. 10.0%
C. 10.2%
D. 9.6%
RATIONALE: WACC = (D/V)*Rd*(1-T) + (E/V)*Re. D/E=0.5 => D/V=1/3, E/V=2/3. WACC =
(1/3)(8%)(1-0.3) + (2/3)(12%) = 1.867% + 8% = 9.867% 9.8%. Option B is 10.0%, which would
result if the tax shield were ignored. Option C is 10.2%, a miscalculation. Option D is 9.6%, also
incorrect.
Page 3
CORRECT ANSWERS PLUS RATIONALE
GRADED A+ NEW UPDATE 2026-2027
49 QUESTIONS
TABLE OF CONTENTS
# TOPIC
1 Compute and interpret time value of money, bond, and equity valuation metrics
2 Evaluate capital investment projects using NPV, IRR, payback, and profitability index
3 Analyze financial statements and ratios to assess firm performance and risk
4 Determine the weighted average cost of capital and optimal capital structure
5 Apply working capital management techniques to optimize liquidity and profitability
6 WGU C214 PA Exam Review Questions and Correct Answers plus Rationale Graded A+ New Update
2026
7 2027
8 Foundations of Finance, Accounting, and Managerial Economics
9 Applied Finance, Accounting, and Managerial Economics
10 Advanced Finance, Accounting, and Managerial Economics
11 Finance, Accounting, and Managerial Economics Review
ABSTRACT
This study document brings together 49 carefully worded exam questions drawn from WGU C214
PA Exam Review Questions and Correct Answers plus Rationale Graded A+ New Update
2026-2027, with the strongest emphasis placed on Compute and interpret time value of money,
bond, and equity valuation metrics, Evaluate capital investment projects using NPV, IRR, payback,
and profitability index and Analyze financial statements and ratios to assess firm performance and
risk. Every item follows the wording style and level of reasoning you meet in the real paper, and
each one is paired with a clear rationale so the correct choice is never a guess. Work through the
set at your own pace, mark the questions that slow you down, then come back to them until the
reasoning feels automatic. Learners who revise this way walk into the exam room recognising the
pattern behind the questions instead of meeting them for the first time. Keep going - steady, honest
practice is what turns a difficult paper into a comfortable pass.
Page 1
,Q1 COMPUTE AND INTERPRET TIME VALUE OF MONEY, BOND, AND EQUITY VALUATION
METRICS
A firm has a beta of 1.4, the risk-free rate is 3%, and the market risk premium is
6%. The firm is considering a project with an expected return of 11.5%. According
to CAPM, should the firm accept the project?
A. Yes, because the expected return exceeds the required return.
B. No, because the required return is 11.4% and the expected return is only 11.5%.
C. No, because the required return is 11.4% and the expected return is 11.5%, so it is
acceptable but marginal. CORRECT
D. Yes, because the project's beta is irrelevant.
RATIONALE: Required return = 3% + 1.4(6%) = 11.4%. The expected return of 11.5% exceeds
the required return by 0.1%, so the project is acceptable but marginally so. Option B is incorrect
because it says 'No' despite the expected return exceeding the required return. Option A is too
absolute; the project barely exceeds the threshold. Option D is false because beta is central to
CAPM.
Q2 COMPUTE AND INTERPRET TIME VALUE OF MONEY, BOND, AND EQUITY VALUATION
METRICS
A company reports net income of $500,000, depreciation of $80,000, an increase in
accounts receivable of $30,000, and a decrease in accounts payable of $20,000.
What is the cash flow from operations using the indirect method?
A. $530,000 CORRECT
B. $570,000
C. $610,000
D. $550,000
RATIONALE: CFO = Net income + Depreciation - Increase in AR - Decrease in AP = $500,000 +
$80,000 - $30,000 - $20,000 = $530,000. Option B incorrectly adds the decrease in AP instead of
subtracting. Option C adds the increase in AR. Option D omits the AP adjustment.
Page 2
, Q3 COMPUTE AND INTERPRET TIME VALUE OF MONEY, BOND, AND EQUITY VALUATION
METRICS
A bond has a face value of $1,000, a coupon rate of 6% paid semiannually, and 10
years to maturity. If the yield to maturity is 8%, what is the bond's price?
A. $864.10 CORRECT
B. $1,000.00
C. $1,135.90
D. $927.50
RATIONALE: Semiannual coupon = $30, n=20, YTM per period=4%. Price = $30 * [1 -
(1.04)^-20]/0.04 + $1,000/(1.04)^20 = $864.10. Option B is the face value, ignoring the discount.
Option C is the price if the yield were lower than the coupon. Option D is a miscalculation.
Q4 COMPUTE AND INTERPRET TIME VALUE OF MONEY, BOND, AND EQUITY VALUATION
METRICS
A firm has a debt-to-equity ratio of 0.5, a tax rate of 30%, a cost of debt of 8%, and
a cost of equity of 12%. What is the weighted average cost of capital (WACC)?
A. 9.8% CORRECT
B. 10.0%
C. 10.2%
D. 9.6%
RATIONALE: WACC = (D/V)*Rd*(1-T) + (E/V)*Re. D/E=0.5 => D/V=1/3, E/V=2/3. WACC =
(1/3)(8%)(1-0.3) + (2/3)(12%) = 1.867% + 8% = 9.867% 9.8%. Option B is 10.0%, which would
result if the tax shield were ignored. Option C is 10.2%, a miscalculation. Option D is 9.6%, also
incorrect.
Page 3
