Principles of Corporate Finance- Chapter 9 Exam Bank Solution Manual (Graded A+)
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Principles of Corporate Finance- Chapter 9
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Principles Of Corporate Finance- Chapter 9
Principles of Corporate Finance- Chapter 9 Exam Bank Solution Manual (Graded A+)
The company cost of capital is the appropriate discount rate for a firm's - Answers average-risk projects
Which of the following types of projects has average total risk? - Answers Expansions of existing business
Th...
Principles of Corporate Finance- Chapter 9 Exam Bank Solution Manual (Graded A+)
The company cost of capital is the appropriate discount rate for a firm's - Answers average-risk projects
Which of the following types of projects has average total risk? - Answers Expansions of existing
business
The market value of Charter Cruise Company's equity is $15 million and the market value of its debt is $5
million. If the required rate of return on the equity is 20 percent and that on its debt is 8 percent,
calculate the company's cost of capital. (Assume no taxes.) - Answers 17 Percent
The market value of Cable Company's equity is $60 million and the market value of its debt is $40
million. If the required rate of return on the equity is 15 percent and that on its debt is 5 percent,
calculate the company's cost of capital. (Assume no taxes.) - Answers 11 Percent
The hurdle rate for capital budgeting decisions is - Answers the cost of capital
The company cost of capital, when the firm has both debt and equity financing, is called the - Answers
weighted average cost of capital (WACC).
One calculates the after-tax weighted average cost of capital (WACC) using which of the following
formulas? - Answers WACC = (rD) (1 − TC) (D/V) + (rE) (E/V), where V = D + E.
A firm's cost of equity can be estimated using the
I) discounted cash-flow (DCF) approach;
II) capital asset pricing model (CAPM);
III) arbitrage pricing theory - Answers I, II, and III
A firm's cost of equity can be estimated using the - Answers All of the options are correct (capital asset
pricing model, CAPM; Fama-French three-factor model; arbitrage pricing theory, APT)
The market portfolio's historical returns for the past three years were 10 percent, 10 percent, and 16
percent. Suppose the risk-free rate of return is 4 percent. Estimate the market risk premium. - Answers 8
Percent
Company A's historical returns for the past three years were 6 percent, 15 percent, and 15 percent.
Similarly, the market portfolio's returns were 10 percent, 10 percent, and 16 percent. According to the
security market line (SML), Stock A was - Answers More information is needed
The cost of capital is the same as the cost of equity for firms that are financed - Answers entirely by
equity
The historical returns for the past three years for Stock B and the stock market portfolio are Stock B: 24
percent, 0 percent, 24 percent; market portfolio: 10 percent, 12 percent, 20 percent. Calculate the
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