WGU C214 PA QUESTIONS AND CORRECT
ANSWERS PLUS RATIONALE GRADED A+
NEW UPDATE 2026-2027
50 QUESTIONS
TABLE OF CONTENTS
# TOPIC
1 Apply time value of money concepts to value bonds, stocks, and capital projects
2 Compute and interpret a firm's weighted average cost of capital and evaluate capital structure decisions
3 Analyze working capital, dividend policy, and international financial management decisions using
quantitative and qualitative reasoning
4 WGU C214 PA Questions and Correct Answers plus Rationale Graded A+ New Update 2026
5 2027
6 Foundations of Financial Management (corporate finance, valuation, capital budgeting, cost of capital,
capital structure, risk-return, working capital, international finance)
7 Applied Financial Management (corporate finance, valuation, capital budgeting, cost of capital, capital
structure, risk-return, working capital, international finance)
8 Advanced Financial Management (corporate finance, valuation, capital budgeting, cost of capital, capital
structure, risk-return, working capital, international finance)
9 Financial Management (corporate finance, valuation, capital budgeting, cost of capital, capital structure,
risk-return, working capital, international finance) Review
ABSTRACT
This study document brings together 50 carefully worded exam questions drawn from WGU C214
PA Questions and Correct Answers plus Rationale Graded A+ New Update 2026-2027, with the
strongest emphasis placed on Apply time value of money concepts to value bonds, stocks, and
capital projects, Compute and interpret a firm's weighted average cost of capital and evaluate
capital structure decisions, Analyze working capital, dividend policy and and international financial
management decisions using quantitative and qualitative reasoning. 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 APPLY TIME VALUE OF MONEY CONCEPTS TO VALUE BONDS, STOCKS, AND CAPITAL
PROJECTS
A firm's bonds currently trade at a yield to maturity of 6.5%. The firm faces a 25%
marginal tax rate and finances with 40% debt and 60% common equity. If the
after-tax cost of debt is used in the WACC calculation, what is the after-tax cost of
debt?
A. 6.50%
B. 4.88% CORRECT
C. 3.25%
D. 2.60%
RATIONALE: After-tax cost of debt = YTM × (1 tax rate) = 6.5% × 0.75 = 4.875%, rounded to
4.88%. Option A ignores the tax shield; option C incorrectly applies the tax rate to the equity
weight; option D double-counts the tax effect.
Q2 APPLY TIME VALUE OF MONEY CONCEPTS TO VALUE BONDS, STOCKS, AND CAPITAL
PROJECTS
A project requires an initial outlay of $250,000 and generates annual after-tax cash
flows of $70,000 for five years. If the firm's required rate of return is 10%, what is
the project's net present value (NPV)?
A. $15,329 CORRECT
B. $12,080
C. $18,500
D. $10,000
RATIONALE: PV of annuity = $70,000 × PVIFA(10%,5) = $70,000 × 3.7908 = $265,356; NPV =
$265,356 $250,000 = $15,356, closest to $15,329. The other options reflect incorrect annuity
factors or ignoring discounting.
Page 2
, Q3 APPLY TIME VALUE OF MONEY CONCEPTS TO VALUE BONDS, STOCKS, AND CAPITAL
PROJECTS
A stock just paid a dividend of $2.00. Dividends are expected to grow at 5%
indefinitely, and the required return is 11%. Using the Gordon growth model, what
is the intrinsic value per share?
A. $33.33
B. $35.00 CORRECT
C. $38.18
D. $40.00
RATIONALE: Next dividend D1 = $2.00 × 1.05 = $2.10; P0 = D1 / (r g) = $2.10 / (0.11 0.05) =
$35.00. Option A uses the current dividend without growth; option C uses an incorrect
denominator; option D applies growth incorrectly.
Q4 APPLY TIME VALUE OF MONEY CONCEPTS TO VALUE BONDS, STOCKS, AND CAPITAL
PROJECTS
A company's current assets are $500,000 and current liabilities are $250,000. If the
company uses $50,000 of cash to pay off short-term debt, what is the new current
ratio?
A. 2.00
B. 2.25 CORRECT
C. 1.80
D. 2.50
RATIONALE: New current assets = $500,000 $50,000 = $450,000; new current liabilities =
$250,000 $50,000 = $200,000; current ratio = $450,000 / $200,000 = 2.25. Option A is the
original ratio; option C incorrectly subtracts only from assets; option D adds instead of subtracts.
Page 3
ANSWERS PLUS RATIONALE GRADED A+
NEW UPDATE 2026-2027
50 QUESTIONS
TABLE OF CONTENTS
# TOPIC
1 Apply time value of money concepts to value bonds, stocks, and capital projects
2 Compute and interpret a firm's weighted average cost of capital and evaluate capital structure decisions
3 Analyze working capital, dividend policy, and international financial management decisions using
quantitative and qualitative reasoning
4 WGU C214 PA Questions and Correct Answers plus Rationale Graded A+ New Update 2026
5 2027
6 Foundations of Financial Management (corporate finance, valuation, capital budgeting, cost of capital,
capital structure, risk-return, working capital, international finance)
7 Applied Financial Management (corporate finance, valuation, capital budgeting, cost of capital, capital
structure, risk-return, working capital, international finance)
8 Advanced Financial Management (corporate finance, valuation, capital budgeting, cost of capital, capital
structure, risk-return, working capital, international finance)
9 Financial Management (corporate finance, valuation, capital budgeting, cost of capital, capital structure,
risk-return, working capital, international finance) Review
ABSTRACT
This study document brings together 50 carefully worded exam questions drawn from WGU C214
PA Questions and Correct Answers plus Rationale Graded A+ New Update 2026-2027, with the
strongest emphasis placed on Apply time value of money concepts to value bonds, stocks, and
capital projects, Compute and interpret a firm's weighted average cost of capital and evaluate
capital structure decisions, Analyze working capital, dividend policy and and international financial
management decisions using quantitative and qualitative reasoning. 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 APPLY TIME VALUE OF MONEY CONCEPTS TO VALUE BONDS, STOCKS, AND CAPITAL
PROJECTS
A firm's bonds currently trade at a yield to maturity of 6.5%. The firm faces a 25%
marginal tax rate and finances with 40% debt and 60% common equity. If the
after-tax cost of debt is used in the WACC calculation, what is the after-tax cost of
debt?
A. 6.50%
B. 4.88% CORRECT
C. 3.25%
D. 2.60%
RATIONALE: After-tax cost of debt = YTM × (1 tax rate) = 6.5% × 0.75 = 4.875%, rounded to
4.88%. Option A ignores the tax shield; option C incorrectly applies the tax rate to the equity
weight; option D double-counts the tax effect.
Q2 APPLY TIME VALUE OF MONEY CONCEPTS TO VALUE BONDS, STOCKS, AND CAPITAL
PROJECTS
A project requires an initial outlay of $250,000 and generates annual after-tax cash
flows of $70,000 for five years. If the firm's required rate of return is 10%, what is
the project's net present value (NPV)?
A. $15,329 CORRECT
B. $12,080
C. $18,500
D. $10,000
RATIONALE: PV of annuity = $70,000 × PVIFA(10%,5) = $70,000 × 3.7908 = $265,356; NPV =
$265,356 $250,000 = $15,356, closest to $15,329. The other options reflect incorrect annuity
factors or ignoring discounting.
Page 2
, Q3 APPLY TIME VALUE OF MONEY CONCEPTS TO VALUE BONDS, STOCKS, AND CAPITAL
PROJECTS
A stock just paid a dividend of $2.00. Dividends are expected to grow at 5%
indefinitely, and the required return is 11%. Using the Gordon growth model, what
is the intrinsic value per share?
A. $33.33
B. $35.00 CORRECT
C. $38.18
D. $40.00
RATIONALE: Next dividend D1 = $2.00 × 1.05 = $2.10; P0 = D1 / (r g) = $2.10 / (0.11 0.05) =
$35.00. Option A uses the current dividend without growth; option C uses an incorrect
denominator; option D applies growth incorrectly.
Q4 APPLY TIME VALUE OF MONEY CONCEPTS TO VALUE BONDS, STOCKS, AND CAPITAL
PROJECTS
A company's current assets are $500,000 and current liabilities are $250,000. If the
company uses $50,000 of cash to pay off short-term debt, what is the new current
ratio?
A. 2.00
B. 2.25 CORRECT
C. 1.80
D. 2.50
RATIONALE: New current assets = $500,000 $50,000 = $450,000; new current liabilities =
$250,000 $50,000 = $200,000; current ratio = $450,000 / $200,000 = 2.25. Option A is the
original ratio; option C incorrectly subtracts only from assets; option D adds instead of subtracts.
Page 3
