International Capital Structure And The Cost Of Capital

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Question 1
Free
Multiple Choice

The cost of capital is

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A

the minimum rate of return an investment project must generate in order to pay its financing costs.

B

the minimum rate of return an investment project must generate in order to pay its financing costs plus a reasonable profit.

C

the maximum rate of return an investment project must generate in order to pay its financing costs.

D

the maximum rate of return an investment project must generate in order to pay its financing costs plus a reasonable profit.

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Question 2
Free
Multiple Choice

For a firm that has both debt and equity in its capital structure,its financing cost can be represented by the weighted average cost of capital that is computed by

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A

weighing the pre-tax borrowing cost of the firm and the cost of equity capital, using the debt as the weight.

B

weighing the after-tax borrowing cost of the firm and the cost of equity capital, using the debt as the weight.

C

K = (1 - )Kl + (1 - )i where: image

D

b) and c)

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Question 3
Free
Multiple Choice

In the notation of the book,K = (1 - )Kl + (1 - )i Which of these are correct?

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A

The debt-to-equity ratio is

B

The tax rate is

C

The after-tax cost of debt capital is i

D

All of the above

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Question 4
Free
Multiple Choice

In the notation of the book,K = (1 - )Kl + (1 - )i Which of the following are correct?

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A

The debt-to-total market value ratio is

B

The tax rate is i

C

The after-tax cost of debt capital is i

D

All of the above

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Question 5
Free
Multiple Choice

In the notation of the book,K = (1 - )Kl + (1 - )i Which of the following are correct?

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A

The debt-to-equity ratio is

B

The cost of equity capital for a levered firm is K

C

The pre-tax cost of debt capital is i

D

All of the above

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Question 6
Multiple Choice

In the notation of the book,K = (1 - )Kl + (1 - )i Which of the following are correct?

Choose correct answer/s
A
The debt-to-equity ratio is
B
The cost of equity capital for a levered firm is Kl
C
The after-tax cost of debt capital is i
D
All of the above
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Question 7
Multiple Choice

In the notation of the book,K = (1 - )Kl + (1 - )i Which of the following are correct?

Choose correct answer/s
A
The weighted average cost of capital for a levered firm is K
B
The tax rate is
C
The after-tax cost of debt capital is i
D
All of the above
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Question 8
Multiple Choice

At the optimal capital structure,

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A
K = (1 - )Kl + (1 - )i will be minimized.
B
The debt-equity ratio will be equal to the debt-to-value ratio.
C
K = (1 - )Kl + (1 - )i will be maximized.
D
None of the above
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Question 9
Multiple Choice

Solve for the weighted average cost of capital: image

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A
8.67%
B
8.00%
C
7.60%
D
7.33%
E
7.14%
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Question 10
Multiple Choice

Solve for the weighted average cost of capital: image

Choose correct answer/s
A
8.67%
B
8.00%
C
7.60%
D
7.33%
E
7.14%
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Question 11
Multiple Choice

Solve for the weighted average cost of capital: image

Choose correct answer/s
A
8.67%
B
8.00%
C
7.60%
D
7.33%
E
7.14%
To unlock the question
Question 12
Multiple Choice

Solve for the weighted average cost of capital: image

Choose correct answer/s
A
8.67%
B
8.00%
C
7.60%
D
7.33%
E
7.14%
To unlock the question
Question 13
Multiple Choice

Solve for the weighted average cost of capital: image

Choose correct answer/s
A
8.67%
B
8.00%
C
7.60%
D
7.33%
E
7.14%
To unlock the question
Question 14
Multiple Choice

Solve for the weighted average cost of capital: image

Choose correct answer/s
A
7.00%
B
6.89%
C
6.73%
D
6.67%
E
6.57%
To unlock the question
Question 15
Multiple Choice

Solve for the weighted average cost of capital: image

Choose correct answer/s
A
7.00%
B
6.89%
C
6.73%
D
6.67%
E
6.57%
To unlock the question
Question 16
Multiple Choice

Solve for the weighted average cost of capital: image

Choose correct answer/s
A
7.00%
B
6.89%
C
6.73%
D
6.67%
E
6.57%
To unlock the question
Question 17
Multiple Choice

Solve for the weighted average cost of capital: image

Choose correct answer/s
A
7.00%
B
6.89%
C
6.73%
D
6.67%
E
6.57%
To unlock the question
Question 18
Multiple Choice

Solve for the weighted average cost of capital: image

Choose correct answer/s
A
7.00%
B
6.89%
C
6.73%
D
6.67%
E
6.57%
To unlock the question
Question 19
Multiple Choice

Solve for the weighted average cost of capital: image

Choose correct answer/s
A
8.67%
B
8.00%
C
7.60%
D
7.33%
E
7.14%
To unlock the question
Question 20
Multiple Choice

Solve for the weighted average cost of capital: image

Choose correct answer/s
A
8.67%
B
8.00%
C
7.60%
D
7.33%
E
7.14%
To unlock the question