A stock split is usually taxable to a firm as it restructures the capital. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The rate on 3-month Treasury Bills is always considered to be the risk-free rate when applying the CAPM. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Your new firm borrows $10,000. This would be considered a/an ________ activity. A) investing B) financing C) operations D) ill advised ANSWER B
Date: September 19th, 2020
The cost of giving up a cash discount under the terms of sale 1/10 net 60 (assume a 360-day year) is ________. A) 7.3 percent B) 6.1 percent C) 14.7 percent D) 12.2 percent ANSWER A
Date: September 19th, 2020
If a project has a positive NPV, it should also have an IRR less than the hurdle rate. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The cash flow cycle also is known as the: A) cash conversion cycle. B) cash-to-cash cycle. C) working capital cycle. D) revolving credit cycle. ANSWER A
Date: September 19th, 2020
Using the author’s suggested process of ignoring short term capital, what are the book value weights for the component costs of capital for Bacon Signs? A) LTD = 36.4% and Equity = 63.6% B) LTD = 56.7% and Equity = 43.3% C) LTD = 50.4% and Equity = 49.6% D) LTD = 41.0% and Equity […]
Date: September 19th, 2020
The net present value method implicitly makes the reasonable assumption that any interim cash flows from the project are reinvested at the firm’s internal rate of return. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
In the context of the CAPM and assuming investors’ past expectations have been fulfilled, the average historical market risk premium is a useful initial estimate of the expected future market risk premium. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The cost of giving up a cash discount under the terms of sale 5/20 net 120 (assume a 360-day year) is ________. A) 15 percent B) 18.9 percent C) 15.8 percent D) 20 percent ANSWER B
Date: September 19th, 2020
