Ch14 - Add, modify, and remove questions. Select a question...

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Add, modify, and remove questions. Select a question type from the Add Question drop-down list and click Go to add questions. Use Creation Settings to establish which default options, such as feedback and images, are available for question creation. COURSES > FUNDAMENTALS OF CORPORATE FINANCE:, 9/E - ROSS > CONTROL PANEL > POOL MANAGER > POOL CANVAS Pool Canvas Add Multiple Choice Creation Settings Name Chapter 14 Cost of Capital Description Questions which Blackboard's assessment component is incapable of supporting are not included in the export. Instructions Add Question Here Question 1 Multiple Choice Question A group of individuals got together and purchased all of the outstanding shares of common stock of DL Smith, Inc. What is the return that these individuals require on this investment called? Answer dividend yield cost of equity capital gains yield cost of capital income return Correct Feedback Refer to section 14.2 Incorrect Feedback Refer to section 14.2 Add Question Here Question 2 Multiple Choice Question Textile Mills borrows money at a rate of 13.5 percent. This interest rate is referred to as the: Answer compound rate. current yield. cost of debt. capital gains yield. cost of capital. Correct Feedback Refer to section 14.3 Incorrect Feedback Refer to section 14.3 Add Question Here Question 3 Multiple Choice Question The average of a firm's cost of equity and aftertax cost of debt that is weighted based on the firm's capital structure is called the: Answer reward to risk ratio. weighted capital gains rate. structured cost of capital. subjective cost of capital. weighted average cost of capital. Correct Feedback Refer to section 14.4 Incorrect Feedback Refer to section 14.4 Add Question Here Question 4 Multiple Choice Question When a manager develops a cost of capital for a specific project based on the cost of capital for another firm which has a similar line of business as the project, the manager is utilizing the _____ approach.
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Answer subjective risk pure play divisional cost of capital capital adjustment security market line Correct Feedback Refer to section 14.5 Incorrect Feedback Refer to section 14.5 Add Question Here Question 5 Multiple Choice Question A firm's cost of capital: Answer will decrease as the risk level of the firm increases. for a specific project is primarily dependent upon the source of the funds used for the project. is independent of the firm's capital structure. should be applied as the discount rate for any project considered by the firm. depends upon how the funds raised are going to be spent. Correct Feedback Refer to section 14.1 Incorrect Feedback Refer to section 14.1 Add Question Here Question 6 Multiple Choice Question The weighted average cost of capital for a wholesaler: Answer is equivalent to the aftertax cost of the firm's liabilities. should be used as the required return when analyzing a potential acquisition of a
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