
FINC 600 FINC600 Week 4 Practice Quiz Answers (APU)
FINC600 Week 4 Practice Quiz (APUS)
- Using the company cost of capital to evaluate a project is:
I) Always correct
II) Always incorrect
III) Correct for projects that are about as risky as the average of the firm's other assets - Which of the following type of projects has average risk?
- The market value of Cable Company's equity is $60 million, and the market value of its risk- free debt is $40 million. If the required rate of return on the equity is 15% and that on the debt is 5%, calculate the company's cost of capital. (Assume no taxes.)
- The hurdle rate for capital budgeting decisions is:
- The market value of XYZ Corporation's common stock is 40 million and the market value of the risk-free debt is 60 million. The beta of the company's common stock is 0.8, and the expected market risk premium is 10%. If the Treasury bill rate is 6%, what is the firm's cost of capital? (Assume no taxes.)
- On a graph with common stock returns on the Y- axis and market returns on the X-axis, the slope of the regression line represents the:
- Generally, postaudits are conducted for large projects:
- You are given the following data for year-1.
- The following are drawbacks of sensitivity analysis except:
- The accounting break-even point occurs when: