FINC 324 Exam Questions & Answers

Capital budgeting decisions that include both investment and financing decisions can be analyzed by: I) Adjusting the present value II) Adjusting the discount rate III) Ignoring financing mix - D. I and II only Total market value of a firm (V): [D = market value of debt; E = market value of equity] - A 3. The after-tax weighted average cost of capital is determined by: A. Multiplying the weighted average after tax cost of debt by the weighted average cost of equity B. Adding the weighted average before tax cost of debt to the weighted average cost of equity C. Adding the weighted average after tax cost of debt to the weighted average cost of equity D. Dividing the weighted average before tax cost of debt to the weighted average cost of equity - C