Finance Chp 14 Quiz 1

Finance Chp 14 Quiz - Question 1 1 The aftertax cost of debt generally increases when I a firm's bond rating increases II the market rate of

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1. The aftertax cost of debt generally increases when: I. a firm's bond rating increases. II. the market rate of interest increases. III. tax rates decrease. IV. bond prices rise. Answer I and III only II and III only I, II, and III only II, III, and IV only I, II, III, and IV 0.1 points Question 2 1. Nelson's Landscaping has 1,200 bonds outstanding that are selling for $990 each. The company also has 2,500 shares of preferred stock at a market price of $28 a share. The common stock is priced at $37 a share and there are 28,000 shares outstanding. What is the weight of the common stock as it relates to the firm's weighted average cost of capital? Answer 43.08 percent 45.16 percent 47.11 percent 54.00 percent 55.45 percent 0.1 points Question 3 1. The weighted average cost of capital for a firm is the: Answer discount rate which the firm should apply to all of the projects it undertakes. rate of return a firm must earn on its existing assets to maintain the current value of its stock. coupon rate the firm should expect to pay on its next bond issue. minimum discount rate the firm should require on any new project.
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This note was uploaded on 07/31/2011 for the course FIN 550 taught by Professor Rajneeshsharma during the Summer '11 term at Saint Joseph's University.

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Finance Chp 14 Quiz - Question 1 1 The aftertax cost of debt generally increases when I a firm's bond rating increases II the market rate of

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