BCOR 2204 Test Quizzes with Correct Answers
1.) The ________ is a weighted average of the cost of funds which reflects the
interrelationship
of financing decisions.
cost of capital
3.) In calculating the cost of common stock equity, ________.
the use of the CAPM is preferred, because it directly considers risk effect on the
stock
is the process of evaluating and selecting long-term investments that are
consistent
with a firm's goal of maximizing owners' wealth.
Capital budgeting
A $60,000 outlay for a new machine with a usable life of 15 years is called
________
capital expenditure
Which of the following is an advantage of NPV
It takes into account the time value of investors' money
, The ________ is the discount rate that equates the present value of the cash
inflows with the
initial investment
internal rate of return
true or False - when calculating the company's WACC you do not need to tax
effect the
yield to Maturity (YTM)?
False
True or False - The equation to calculate the cost of preferred stock is also
called the Zero
Growth Model
True
The optimal proportions of debt verses equity are always bespoke and
uncertain. The
following, however, is a general rule:
If the company has a higher tax rate, they have a preference to debt and if they
have a higher
business volatility they have a preference to equity
1.) The ________ is a weighted average of the cost of funds which reflects the
interrelationship
of financing decisions.
cost of capital
3.) In calculating the cost of common stock equity, ________.
the use of the CAPM is preferred, because it directly considers risk effect on the
stock
is the process of evaluating and selecting long-term investments that are
consistent
with a firm's goal of maximizing owners' wealth.
Capital budgeting
A $60,000 outlay for a new machine with a usable life of 15 years is called
________
capital expenditure
Which of the following is an advantage of NPV
It takes into account the time value of investors' money
, The ________ is the discount rate that equates the present value of the cash
inflows with the
initial investment
internal rate of return
true or False - when calculating the company's WACC you do not need to tax
effect the
yield to Maturity (YTM)?
False
True or False - The equation to calculate the cost of preferred stock is also
called the Zero
Growth Model
True
The optimal proportions of debt verses equity are always bespoke and
uncertain. The
following, however, is a general rule:
If the company has a higher tax rate, they have a preference to debt and if they
have a higher
business volatility they have a preference to equity
