Question 1

A real option can present management with the opportunity to

Accepted Answer

A) vary output. 
B) abandon a project. 
C) postpone a project. 
D) All of the above 
A) vary output. 
B) abandon a project. 
C) postpone a project. 
D) All of the above

Question 2

Capital budgeting projects include all of the following except

Accepted Answer

A) the purchase of a six-month treasury bill. 
B) the expansion of a plant. 
C) the development of a new product. 
D) the replacement of a piece of equipment. 
A) the purchase of a six-month treasury bill. 
B) the expansion of a plant. 
C) the development of a new product. 
D) the replacement of a piece of equipment.

Question 3

If a company's stock is perceived to be more risky than average,what will happen to their equity cost of capital? Explain using the capital asset pricing model.

Accepted Answer

A stock that is more volatile (riskier)t

Question 4

Savings accounts pay very low rates of interest.The average return on the stock market is about 10-12%,in the long run.Why would anyone put money into a savings account?

Accepted Answer

The stock market gives a highe

Question 5

A company's capital structure is made up of 40% debt and 60% common equity (both at market values).The interest rate on bonds similar to those issued by the company is 8%.The cost of equity is estimated to be 15%.The income tax rate is 40%.The company's weighted cost of capital is

Accepted Answer

A) 11.5%. 
B) 12.2%. 
C) 10.9%. 
D) 8)9%. 
A) 11.5%. 
B) 12.2%. 
C) 10.9%. 
D) 8)9%.

Question 6

The time value of money can be best described as

Accepted Answer

A) a dollar today is worth more than a dollar tomorrow. 
B) the basis on which net present values are calculated. 
C) the basis on which internal rates of return are calculated. 
D) All of the above 
A) a dollar today is worth more than a dollar tomorrow. 
B) the basis on which net present values are calculated. 
C) the basis on which internal rates of return are calculated. 
D) All of the above

Question 7

Capital rationing refers to

Accepted Answer

A) setting a minimum acceptable rate of return for a capital outlay. 
B) selecting among profitable capital outlays when there are constraints on the funds available. 
C) determining the maximum price to pay for a capital product. 
D) None of the above 
A) setting a minimum acceptable rate of return for a capital outlay. 
B) selecting among profitable capital outlays when there are constraints on the funds available. 
C) determining the maximum price to pay for a capital product. 
D) None of the above

A real option can present management with the opportunity to

Capital budgeting projects include all of the following except

If a company's stock is perceived to be more risky than average,what will happen to their equity cost of capital? Explain using the capital asset pricing model.

Savings accounts pay very low rates of interest.The average return on the stock market is about 10-12%,in the long run.Why would anyone put money into a savings account?

A company's capital structure is made up of 40% debt and 60% common equity (both at market values).The interest rate on bonds similar to those issued by the company is 8%.The cost of equity is estimated to be 15%.The income tax rate is 40%.The company's weighted cost of capital is

The time value of money can be best described as

Capital rationing refers to

Introduction

The Firm and Its Goals

Supply and Demand

Demand Elasticity

Demand Estimation and Forecasting Appendices 5A and 5B

The Theory and Estimation of Production Appendices 6A,6B,and 6C

The Theory and Estimation of Cost Appendices 7A,7B,and 7C

Pricing and Output Decisions: Perfect Competition and Monopoly Appendices 8A and 8B

Pricing and Output Decisions: Monopolistic Competition and Oligopoly

Special Pricing Practices

Game Theory and Asymmetric Information

The Multinational Corporation in a Global Setting

Government and Industry: Challenges and Opportunities for Todays Manager

The Global Soft Drink Industry

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Exam 12: Capital Budgeting and Risk

A real option can present management with the opportunity to

Capital budgeting projects include all of the following except

If a company's stock is perceived to be more risky than average,what will happen to their equity cost of capital? Explain using the capital asset pricing model.

Savings accounts pay very low rates of interest.The average return on the stock market is about 10-12%,in the long run.Why would anyone put money into a savings account?

A company's capital structure is made up of 40% debt and 60% common equity (both at market values).The interest rate on bonds similar to those issued by the company is 8%.The cost of equity is estimated to be 15%.The income tax rate is 40%.The company's weighted cost of capital is

The time value of money can be best described as

Capital rationing refers to

Introduction

The Firm and Its Goals

Supply and Demand

Demand Elasticity

Demand Estimation and Forecasting Appendices 5A and 5B

The Theory and Estimation of Production Appendices 6A,6B,and 6C

The Theory and Estimation of Cost Appendices 7A,7B,and 7C

Pricing and Output Decisions: Perfect Competition and Monopoly Appendices 8A and 8B

Pricing and Output Decisions: Monopolistic Competition and Oligopoly

Special Pricing Practices

Game Theory and Asymmetric Information

The Multinational Corporation in a Global Setting

Government and Industry: Challenges and Opportunities for Todays Manager

The Global Soft Drink Industry

Filters