CORPORATE FINANCE TEST BANK STUFF 11th Canadian Edition Ross

CORPORATE FINANCE TEST BANK STUFF 11th Canadian Edition Ross The interests of community groups affected by a company's operations are most likely to be considered in corporate governance under: - CORRECT ANSWER- Stake Holder Theory Dividend Discount Model Approach - CORRECT ANSWER- Need to reorganize to be finding K ; Required Return kce = (D1/P0) + g Which yield measure is the most appropriate for comparing a company's investments in short-term securities? - CORRECT ANSWER- When evaluating the performance of its short-term securities investments, a company should compare them on a bond equivalent yield basis. The recommended method is to treat flotation costs as.... - CORRECT ANSWER- The recommended method is to treat flotation costs as a cash outflow at project initiation rather than as a component of the cost of equity. In a net present value (NPV) profile, the internal rate of return is represented as the: - CORRECT ANSWER- The internal rate of return is the rate of discount at which the NPV of a project is zero. On an NPV profile, this is the point where the profile intersects the horizontal axis. capital components from cheapest to most expensive when calculating WACC - CORRECT ANSWER- The order from cheapest to most expensive is: debt, preferred stock (which acts like a hybrid of debt and equity), and common equity. The stakeholders most likely to be concerned with their legal liabilities are: - CORRECT ANSWER- Directors are legally responsible for their decisions and actions as board members. Neither regulators nor creditors face significant legal liabilities for their actions. Which of the following stakeholders are most likely to benefit from a company's growth and excellent financial performance? Customers - Governments - Creditors - CORRECT ANSWER- Governments receive greater tax revenues when financial performance is excellent and profits are higher. Creditors do not receive extra returns for performance better than that is adequate to repay debt. Customers seek company stability and ongoing relationships with the company. The NPV profile is a graphical representation of the change in net present value relative to a change in the: - CORRECT ANSWER- Discount Rate