chap015 - Chapter 015 Cost of Capital Multiple Choice...

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Chapter 015 Cost of Capital Multiple Choice Questions 1. The return shareholders require on their investment in a firm is called the: a. dividend yield. B . cost of equity. c. capital gains yield. d. cost of capital. e. income return. SECTION: 15.2 TOPIC: COST OF EQUITY TYPE: DEFINITIONS 2. The return lenders require on loaned funds to a firm is called the: SECTION: 15.3 TOPIC: COST OF DEBT TYPE: DEFINITIONS 3. The weighted average of a firm's cost of equity and aftertax cost of debt is called the: SECTION: 15.4 TOPIC: WACC TYPE: DEFINITIONS 15-1
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Chapter 015 Cost of Capital 4. 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. SECTION: 15.5 TOPIC: PURE PLAY APPROACH TYPE: DEFINITIONS 5. The cost of capital: a. will decrease as the risk level of a firm increases. b. is primarily dependent upon the source of the funds used for a project. c. implies a project will produce a positive net present value only when the rate of return on the project is less than the predetermined cost of capital. d. remains constant for all projects undertaken by the same firm. E . depends on how the funds are going to be utilized. SECTION: 15.1 TOPIC: COST OF CAPITAL TYPE: CONCEPTS 6. The overall cost of capital for a retail store: SECTION: 15.1 TOPIC: COST OF CAPITAL TYPE: CONCEPTS 15-2
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Chapter 015 Cost of Capital 7. The cost of capital primarily depends on the: SECTION: 15.1 TOPIC: COST OF CAPITAL TYPE: CONCEPTS
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