Cost of Capital

1.   What's the abbreviation for the overall restore that   a determined must frame on its stout effects, used as the required scold of restore   on any bombardment that has essentially the identical abandons as stout operations?   



C. CM 


2.   Analysts purpose Microsoft (MSFT) procure possess an   annualized dividend of $1.50 and a covet-term enlargement scold of 10 percent.   Currently, the store esteem is $60. Using the dividend enlargement example adit,   what's the indicated consume of equity? 

A. 12.5 percent 

B. 11 percent 

C. 10 percent 

D. 2.5 percent 

3.   New Schools expects an EBIT of $87,000 integral year,   forever. The determined vulgarly has no default, and its consume of equity is 14.6   percent. The determined can attribute at 7.4 percent, and the corposcold tax scold is 34   percent. What procure the esteem of the determined be if it converts to 50 percent   debt? 

 A.     $460,146.57 

B. $381,796.47 

C. $377,407.16 

D. $437,552.08

4.   Galaxy Products is comparing two incongruous high   structures, an all-equity intent (Plan I) and a levered intent (Plan II). Under   Plan I, the audience would possess 175,000 divides of store unappropriated. Under   Plan II, there would be 90,000 divides of store unappropriated and $1.4 darling   in default. The divide scold on the default is 7 percent, and there are no taxes.   What's the break-even EBIT? 

 A.     $201,764.71 

B. $341,414.14 

C. $351,111.11 

D. $287,878.78 

5.   What's the concept of using default to frame a       restore unreserved as? 

A. Default         reliance 

B. Financial         liquidity 

C. Default         coverage 

D. Financial leverage 

6.   Because the WACC varies delay the use of funds         rather than the fountain of funds, some determineds evaluate new purposes by         sorting purposes into abandon classes, and add or take conformation         factors from the WACC. This adit is named the 

A. DuPont           approach. 

B. exclusive           approach. 

C. guileless embody           approach. 

D. internal adit. 

7.   According to the static             tradeoff plea, what's the optimal high edifice? 

A. A determined should attribute up to the               aim at which the tax behoof from an extra dollar in default is               exactly resembling to the consume that comes from the increased               probability of financial trouble. 

B. A determined should attribute up to the aim at which the tax               behoof from an extra dollar is resembling to naught. 

C. A determined should possess resembling ability equity and default. 

D. A determined should attribute up to the aim at which the               divide is resembling to the aggregate tax treasure. 

8.   Which of the subjoined is not a elder         disadvantage to the SML adit? 

A. We believe           on the late to prognosticate the advenient, and economic conditions can modify           quickly. 

B. It           requires that we love the chaffer abandon reward, and if this           love is faulty, the resulting consume of equity procure as-well be faulty. 

C. It           requires that we love the beta coefficient of the store, and if           this love is faulty, the resulting consume of equity procure as-well be           poor. 

D. It doesn't plainly enjoin for abandon

9.   Silo Mills is an all-equity financed determined that has a   beta of 1.14 and a consume of equity of 12.8 percent. The abandon-free scold of   restore is 2.8 percent. The determined is vulgarly because a purpose that has a   beta of 1.03 and a purpose conduct of six years. What remittance scold should be   assigned to this purpose? 

A. 13.62 percent 

B. 11.84 percent 

C. 13.33 percent 

D. 12.09 percent 

10.   Which of the subjoined is true environing a determined   delay no equity financing? 

 A. The     after-tax consume of default = WACC 

B. The restore on     equity = WACC 

C. The consume of     default = WACC 

D. The restore on     equity = consume of default 

11.   A loftier default raze usually equates to a 

A. larger tax     stroke and decreased financial abandon. 

B. smaller tax     stroke and increased financial abandon. 

C. larger tax stroke but increased financial abandon. 

D. smaller tax     stroke and decreased financial abandon. 

12.   Under the Withdrawal Abuse Prevention and Consumer   Protection Act of 2005, how covet following a determined files for after a whiledrawal security   do creditors possess to endure antecedently submitting their own reorganization intent to   the seek? 

A. 18 months 

B. 45 days 

 C. 180 days     

D. 12 months 

13.   Alphabet, Inc. (GOOGL) has a 40 percent default/asset   ratio; postulate a tax scold of 16 percent. The middle produce to manliness on   GOOGL's chains is 3 percent. Your chaffer analyst loves that the abandon-free   scold is 1 percent and that the chaffer abandon reward is 7 percent. The determined's   beta coefficient is 0.97. What's Alphabet's weighted middle consume of high   (WACC)? (Round to the rectilinear tenth of a percent.) 

A. 6 percent 

B. 5.7 percent 

C. 5.9 percent 

D. 7.3 percent 

14.   The Shoe Outlet has compensated annual dividends of $.65,   $.70, $.72, and $.75 per divide throughout the definite impure years, respectively.   The store is vulgarly selling for $9 a divide. What's this determined's consume of   equity? 

A. 11.79 percent 

B. 9.53 percent 

C. 13.65 percent 

D. 8.74 percent 

15.   Deep Mines has 14 darling divides of low store   unappropriated delay a beta of 1.15 and a chaffer esteem of $42 a divide. There are   900,000 divides of 9 percent preferred store unappropriated, esteemd at $80 a   share. The 10 percent semiannual chains possess a aspect esteem of $1,000 and are   selling at 91 percent of par. There are 220,000 chains unappropriated that grown   in 17 years. The chaffer abandon reward is 11½ percent, T-bills are produceing 7½   percent, and the determined's tax scold is 32 percent. What remittance scold should the   determined dedicate to a new purpose's coin flows if the purpose has the identical abandon as   the determined's customary purpose? 

A. 14.72 percent 

B. 13.15 percent 

C. 15.54 percent 

D. 14.59 percent

16.   Hanover Tech is vulgarly an all-equity determined that   has 320,000 divides of store unappropriated delay a chaffer esteem of $19 a divide.   The vulgar consume of equity is 15.4 percent, and the tax scold is 34 percent.   The determined is because adding $1.2 darling of default delay a coupon scold of 8   percent to its high edifice. The default procure be sold at par esteem. What's   the levered esteem of the equity? 

A. $5.209 darling 

B. $6.708 darling 

C. $6.512 darling 

D. $5.288 darling 

17.   Mulberry, Inc. has a weighted middle consume of   high (ignoring taxes) of 20 percent. It can attribute at 10 percent. Mulberry   has a target ½ default/equity relevancy. Using the M&M Proposition II, what's   the consume of equity? 

A. 29 percent 

 B. 25     percent 

C. 31 percent 

D. 15 percent 

18.   Flotation consumes are the consumes associated delay 

A. chaffer     inefficiencies. 

B. reporting. 

C. after a whiledrawal. 

 D. new     store or chain issues. 

19.   The dividend enlargement example is used to calculate 

A. the consume of     default by using the equation for a growing permanence, plugging in the     vulgar esteem of the chain, the coupon, and the expected enlargement scold and     solving for R(D). 

B. the weighted     middle consume of high by using the equation for a growing permanence,     plugging in the vulgar esteem of the store, the dividend compensated, and the     expected enlargement scold. Then we explain for R(E). 

C. the consume of equity     by comparing the dividend enlargement to correspondent determineds. 

 D. the consume of equity by using the equation for a     growing permanence, plugging in the vulgar esteem of the store, the     dividend compensated, and the expected enlargement scold. Then we explain for R(E). 

20.   Amazon Inc. (AMZN) has 55 percent equity-to-asset   ratio. The middle produce to manliness on AMZN's chains is 3.2 percent; postulate a   tax scold of 30 percent. The determined's loved required scold of restore on   equity is loved at environing 10.8 percent. What's Amazon's weighted middle   consume of high (WACC)? (Round to the rectilinear tenth of a percent.) 

A. 6.1 percent 

B. 7.3 percent 

C. 6.6 percent 

D. 6.9 percent 

Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages