Chapter 19 - Chapter 19 The Cost of Capital for Foreign Projects 1 2 3 4 5 The weighted average cost of capital does not deal with the following

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Chapter 19 The Cost of Capital for Foreign Projects 1. The weighted average cost of capital does not deal with the following components: A. the cost of equity B. the cost of debt after tax C. the value of the firm's debt * D. the cost of inventory E. the value of the firm's equity 2. The cost of equity can be derived from the following model: A. an inventory model B. a cash flow model * C. the capital asset pricing model D. a debt model E. none of the above 3. The cost of debt should be derived from the following consideration: A. debt capacity of a firm B. solvency of a firm C. liquidity of a firm * D. after tax interest cost E. none of the above 4. The weighted average cost of capital consists of the following ___. A. the cost of debt and the cost of preferred stock * B. the cost of debt, the cost of preferred stock and the cost of equity C. the cost of debt, the cost of preferred stock, and the cost of retained earnings D. the cost of common stock and the cost of retained earnings A. the cost of debt, the cost of preferred stock, and the cost of retained earnings 5. When we calculate the weighted average cost of capital, which of the following methods is superior? A. the book value of debt B. the book value of equity * C. the market value of debt and equity D. the market value of assets E. none of the above
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6. The weighted average cost of capital usually goes down up to a certain point if we add A. more equity * B. more debt C. more preferred stock D. none of the above E. all of the above 7. The company's optimum capital structure is compatible with . A. minimizing the company's weighted average cost of capital B. maximizing the value of the company C. maximizing the company's share price * D. all of the above E. none of the above 8. Multinational companies may lower their cost of capital mainly because . A. they are smart * B. they can obtain additional capital internationally C. they have different national work forces D. they have political clout E. none of the above 9. The marginal cost of capital means that . A.
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This note was uploaded on 02/16/2012 for the course FIN 7023 taught by Professor Wald during the Spring '12 term at The University of Texas at San Antonio- San Antonio.

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Chapter 19 - Chapter 19 The Cost of Capital for Foreign Projects 1 2 3 4 5 The weighted average cost of capital does not deal with the following

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