Which of the following statements is true? A) When choosing a target capital structure, the goal is to increase the degree of operating leverage. B) A firm’s degree of operating leverage has no impact on how much debt it uses. C) A firm’s decision to use more debt can affect its cost of equity. D) […]
Date: September 19th, 2020
The least desirable capital budgeting technique from a theoretical standpoint is: A) the payback method. B) net present value. C) the profitability index. D) the internal rate of return. E) the modified internal rate of return. ANSWER A
Date: September 19th, 2020
Wilson’s Cabinets has bonds outstanding that mature in eight years, have a 6 percent coupon and pay interest annually. These bonds have a face value of $1,000 and a current market price of $1,020. What is the company’s pre-tax cost of debt? A) 5.68 percent B) 6.19 percent C) 6.34 percent D) 6.82 percent E) […]
Date: September 19th, 2020
Which of the following statements is false? A) If you are listed as a dependent on your parent’s return, you need not file an individual return yourself. B) If you are under 24 and a full-time student, you may be claimed as a dependent on your parent’s return. C) A qualified tuition reduction is tax-free. […]
Date: September 19th, 2020
A “limited” warranty means the warranty is for a limited period of time. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Pan American Airlines’ shares are currently trading at $69.25 each. The yield on Pan Am’s debt is 4% and the firm’s beta is 0.7. The T-Bill rate is 4% and the expected return on the market (E (kM)) is 9%. The company’s target capital structure is 25% debt and 75% equity. Pan American Airlines pays […]
Date: September 19th, 2020
In a recession, college recruiting is often curtailed sharply. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Sara Flea Collar Inc. is evaluating an overseas expansion that will cost $1 million and is expected to generate the following cash flows: year 1: -$250,000; year 2: +$450,000; year 3: +$550,000; and year 4: +$800,000. What is the payback period? A) 3.00 years B) 3.13 years C) 3.31 years D) 3.75 years E) 4.00 […]
Date: September 19th, 2020
Assigning separate discount rates to individual projects when determining which projects should be accepted by the firm: A) may cause the firm’s overall weighted average cost of capital to vary over time if the projects accepted change the overall risk level of the firm. B) will cause the firm’s overall cost of capital to remain […]
Date: September 19th, 2020
Which of the following would not be a characteristic of a qualifying educational expense deduction? A) The education must be required by your employer and serve to maintain or improve your skills in your present work. B) The education must enable you to meet the minimum skills for your present job. C) It reduces your […]
Date: September 19th, 2020
