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Quiz on Cost of Capital Quiz

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1. What does Cost of Capital represent in corporate finance?

2. Which of the following factors would increase a company's Cost of Capital?

3. What is the effect of a higher Cost of Capital on a company's Net Present Value (NPV)?

4. Which of the following is considered in the Weighted Average Cost of Capital (WACC)?

5. How does an increase in debt affect a company's WACC?

6. Why do companies try to minimize their cost of capital?

7. Which of the following represents a company's cost of equity?

8. What is the primary importance of calculating the cost of capital for investment decisions?

9. What is the relationship between a firm's cost of capital and its capital structure?

10. What does the Modigliani-Miller theorem state about the cost of capital?