Reading 36 cost of capital questions and answers

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Reading 36 cost of capital questions and answers

Reading 36: Cost of CapitalQuestion #1 of 87Question 10:414773A new project IS expected to be less risky than the average risk of existing projects. T

Reading 36 cost of capital questions and answers The appropriate discount rate to use when evaluating this project is:A)less than the firm's marginal cost of capital.B)the firm's marginal cost of cap

ital.C)greater than the firm's marginal cost of capital.Question #2 of 87Which of the following events will reduce a company's weighted average cost O Reading 36 cost of capital questions and answers

Í capital (WACC)?A)An increase in expected inflation.B)A reduction in the market risk premium.C)A reduction in the company's bond rating.Question ID:

Reading 36 cost of capital questions and answers

414748Question #3 of 87Question 10-414747Given the following information about capital structure, compute the WACC. The marginal tax rate is 40%.Type

Reading 36: Cost of CapitalQuestion #1 of 87Question 10:414773A new project IS expected to be less risky than the average risk of existing projects. T

Reading 36 cost of capital questions and answers #4 of 87Question ID: 4S5786An analyst gathered the following information for ABC Company, which has a target capital structure of 70% common equity a

nd 30% debt:Dividend yield0.035Expected market return Risk-free rate9.00% 4.00%Tax rate0.4Beta0.9Bond yield-to-matunty0.08ABC’s weighted-average cost Reading 36 cost of capital questions and answers

of capital is closest to:A)8.4%.B)7.4%.C)6.9%.Question #5 of 87

Reading 36: Cost of CapitalQuestion #1 of 87Question 10:414773A new project IS expected to be less risky than the average risk of existing projects. T