n1
2 / 2 points
_ are effects of a project on cash flows in other parts of the firm.
Externalities
Sunk costs
Change in net operating working capital
Discount rates
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n2
0 / 2 points
A company is considering a new project. The companys CFO pla
n1
1 / 1 point
Which of the following investment opportunities would yield the highest return?
Quoted annual rate of 6% with annual compounding.
Quoted annual rate of 6% with semi-annual compounding.
Quoted annual rate of 6% with quarterly compounding.
Qu
n1
2 / 2 points
The cost of new common stock (external equity) is generally higher than the cost of retained earnings
(internal equity) because of:
tax effects.
investors required returns.
flotation costs.
coupon payments
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n2
2 / 2 points
Sin
n1
2 / 2 points
The weighted average cost of capital for a given capital budget level is a weighted average of the marginal
cost of each relevant capital component that makes up the firm's target capital structure.
True
False
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set 2
n2
2 / 2
set 1
n1
2 / 2 points
If investment return is stated in dollars, to make a decision regarding return adequacy you also need to
know:
only the scale of investment.
only the timing of the return
both the scale of investment and the timing of the return
neit
n1
2 / 2 points
The NPV calculation implicitly assumes that all cash flows are reinvested at a rate of return equal to the:
cost of debt
cost of preferred stock
internal rate of return for a project
firms cost of capital.
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n2
2 / 2 points
The
n1
2 / 2 points
The process of finding the present value of a cash flow or a series of cash flows is called:
compounding.
time lines.
the opportunity cost rate.
discounting.
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n2
0 / 2 points
The future value of a single sum will:
increase if
n1
2 / 2 points
Which of the following is most correct.
There is seldom much difference between realized returns and expected returns.
Realized returns always exceed expected returns.
Realized returns always are lower than expected returns.
There generall
The primary goal of a publicly-owned firm interested in serving its stockholders should be to:
Maximize expected total corporate profit.
Maximize expected EPS.
Minimize the chances of losses.
Maximize shareholder wealth.
Maximize expected net income.
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ion 1
4 / 4 points
The primary goal of a publicly-owned firm interested in serving its stockholders should be to:
Maximize expected total corporate profit.
Maximize expected EPS.
Minimize the chances of losses.
Maximize shareholder wealth.
Maximize expect
Chapter 16
Questions
1.
The corporate tax view of capital structure is the view that since interest payments on debt are tax deductible and
dividend payments are not, the after-tax cost of capital is cheaper for debt than for equity. Optimally, a firm sho
CORPORATE FINANCIAL MANAGEMENT, Fourth Edition
Solutions Manual, Chapter 2
Chapter 2
Questions
1.
Opportunity cost - The difference between the value of one action and the value of the best alternative action.
Principal-Agent relationship - A situation in
CORPORATE FINANCIAL MANAGEMENT, Fourth Edition
Solutions Manual, Chapter 3
Chapter 3
Questions
1.
The purpose of the income statement is to report revenues, expenses, and profits (or losses) over a given period of time.
The balance sheets purpose is to sh
Chapter 18
Questions
1.
a. April 24 is the ex-dividend date.
b. April 27 is the record date.
c. May 5 is the payment date
d. April 10 is the declaration date.
2.
Dividend policy is irrelevant in a perfect capital market because no wealth is transferred th
CORPORATE FINANCIAL MANAGEMENT, Fourth Edition
Solutions Manual, Chapter 1
Chapter 1
Questions
1.
Finance is a discipline concerned with determining value and making decisions. The finance function allocates
resources, which includes acquiring, investing,
CORPORATE FINANCIAL MANAGEMENT, Fourth Edition
Solutions Manual, Chapter 5
Chapter 5
Questions
1.
A required return is a rate of return that would be required to be willing to make an investment. The required return
exactly reflects the riskiness of the e
Chapter 17
Questions
1.
Pro forma analysis is important when choosing a capital structure to make sure that the firm will be able to service the
debt and use its tax credits.
2.
Subordinated debt ranks below senior debt because it has a lower claim on ass