W10FIN3300_CH13 Exercise

W10FIN3300_CH13 Exercise - FIN 3300-03 Winter 2010 Chapter...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
FIN 3300-03 Chapter 13 Exercise Questions – Part 2 Winter 2010 1. Capital structure decisions refer to the: A) dividend yield of the firm's stock. B) blend of equity and debt used by the firm. C) capital gains available on the firm's stock. D) maturity date for the firm's securities. 2. The company cost of capital, after tax, for a firm with a 60/40 debt/equity split, 8% cost of debt, 15% cost of equity, and a 35% tax rate would be: A) 7.02% B) 9.12% C) 10.80% D) 13.80% 3. What is the pretax cost of debt for a firm in the 35% tax bracket that has a 9% after-tax cost of debt? A) 5.85% B) 12.15% C) 13.85% D) 25.71% 4. Which of the following statements is incorrect concerning the equity component of the WACC? A) The value of retained earnings is not included. B) Market values should be used in the calculations. C) Preferred equity has a separate component. D) There is a tax shield such as with debt. 5.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.
Ask a homework question - tutors are online