Cost of capital is also known as the _____. Check all that apply: appropriate discount rate...
Cost of capital is also known as the _____. Check all that apply:
appropriate discount rate
minimum expected return an investment must offer to be attractive
opportunity cost of investing in real assets instead of financial assets with the same risk
market capitalization rate
required return
Homework Answers
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Cost of capital is also known as the _____. Check all that
apply:
appropriate discount rate...
Cost of capital is knowns as the ____. Check all that apply: (1) required return (2) appropriate discount rate (3) marke...
Cost of capital is knowns as the ____. Check all that apply: (1) required return (2) appropriate discount rate (3) market capitalization rate (4) opportunity cost of investing in real assets instead of financial assets with the same risk (5) minimum expected return an investment must offer to be attractive
In financial analysis, it is important to select an appropriate discount rate. A project's discount rate...
In financial analysis, it is important to select an appropriate discount rate. A project's discount rate must be high to compensate investors for the project's risk. The return that shareholders require from the company as a compensation for their investment risk is referred to as the cost of equity. Consider this case: Sunny Co. is a 100% equity-financed company (no debt or preferred stock); hence, its WACC equals its cost of common equity. Sunny Co.'s retained earnings will be sufficient...
In financial analysis, it is important to select an appropriate discount rate. A project's discount rate...
In financial analysis, it is important to select an appropriate discount rate. A project's discount rate must be high to compensate investors for the project's risk. The return that shareholders require from the company as a compensation for their investment risk is referred to as the cost of equity. Consider this case: Weghorst Ltd is a 100% equity-financed company (no debt or preference shares); hence, its wACC equals its cost of equity. Weghorst Ltd's retained earnings will be sufficient to...
In financial analysis, it is important to select an appropriate discount rate. A project's discount rate...
In financial analysis, it is important to select an appropriate discount rate. A project's discount rate must be high to compensate investors for the project's risk. The return that shareholders require from the company as a compensation for their investment risk is referred to as the cost of equity. Consider this case: Weghorst Co, is a 100% equity-financed company (no debt or preferred stock); hence, its WACC equals its cost of common equity. Weghorst Co.'s retained earnings will be sufficient...
(Select all relevant.] A firm's marginal cost of capital is the weighted average of the cost of the debt and equity...
(Select all relevant.] A firm's marginal cost of capital is the weighted average of the cost of the debt and equity provided to the company by all investors and creditors. rate of return the firm must earn on its investments, in order to maintain its stock price. minimum rate of return that investors require for providing capital to the company discount rate used to evaluate the cash flows of investment projects with the same risk as the firm's existing assets....
The company cost of capital is the appropriate discount rate for a firm's Select one: a....
The company cost of capital is the appropriate discount rate for a firm's Select one: a. risk-free projects b. average-risk projects c. high-risk projects d. low-risk projects
Which of the following statements is FALSE? O A. The opportunity cost of capital is the...
Which of the following statements is FALSE? O A. The opportunity cost of capital is the return the investor forgoes when the investor takes on a new investment. O B. Interest rates we observe in the market will vary based on quoting conventions, the term of investment, and risk C. For a risk-free project, the opportunity cost of capital will typically be greater than the interest rate of U.S. Treasury securities wiith a similar term OD. The opportunity cost of...
TRUE OR FALSE 1) A non-interest bearing checking account is still considered an investment. 2) Earning a high rate of re...
TRUE OR FALSE 1) A non-interest bearing checking account is still considered an investment. 2) Earning a high rate of return with little or no risk is a realistic investment goal. 3) Underwriters are responsible for promoting and facilitating the sale of securities. 4) Only U.S. corporations can list their stocks on the NYSE. 5) A market maker brings together buyers and sellers in an auction market. 6) Margin trading requires the borrowing of securities. 7) An investor who mistakenly...
Leverage and cost of capital: *** Each of the following statements is false or at least...
Leverage and cost of capital: *** Each of the following statements is false or at least misleading, Explain why in each case. 1. A capital investment opportunity offering a 10% discounted cash flow rate of return is an attractive project if it can be 100% debt financed at an 8% interest rate. X risky typy low oferteral offer 2. The more debt the firm issues, the higher the interest rate it must pay. That is one important reason why firms...
Apply weighted average cost of capital (WACC) into a real company. Choose a company and compute...
Apply weighted average cost of capital (WACC) into a real company. Choose a company and compute its WACC. Use the historical risk-free rate of 3.4% and the market return of 12.1%. please show work.
In financial analysis, it is important to select an appropriate discount rate. A project's discount rate must be high to compensate investors for the project's risk. The return that shareholders require from the company as a compensation for their investment risk is referred to as the cost of equity. Consider this case: Sunny Co. is a 100% equity-financed company (no debt or preferred stock); hence, its WACC equals its cost of common equity. Sunny Co.'s retained earnings will be sufficient...
In financial analysis, it is important to select an appropriate discount rate. A project's discount rate must be high to compensate investors for the project's risk. The return that shareholders require from the company as a compensation for their investment risk is referred to as the cost of equity. Consider this case: Weghorst Ltd is a 100% equity-financed company (no debt or preference shares); hence, its wACC equals its cost of equity. Weghorst Ltd's retained earnings will be sufficient to...
In financial analysis, it is important to select an appropriate discount rate. A project's discount rate must be high to compensate investors for the project's risk. The return that shareholders require from the company as a compensation for their investment risk is referred to as the cost of equity. Consider this case: Weghorst Co, is a 100% equity-financed company (no debt or preferred stock); hence, its WACC equals its cost of common equity. Weghorst Co.'s retained earnings will be sufficient...
(Select all relevant.] A firm's marginal cost of capital is the weighted average of the cost of the debt and equity provided to the company by all investors and creditors. rate of return the firm must earn on its investments, in order to maintain its stock price. minimum rate of return that investors require for providing capital to the company discount rate used to evaluate the cash flows of investment projects with the same risk as the firm's existing assets....
Which of the following statements is FALSE? O A. The opportunity cost of capital is the return the investor forgoes when the investor takes on a new investment. O B. Interest rates we observe in the market will vary based on quoting conventions, the term of investment, and risk C. For a risk-free project, the opportunity cost of capital will typically be greater than the interest rate of U.S. Treasury securities wiith a similar term OD. The opportunity cost of...
Leverage and cost of capital: *** Each of the following statements is false or at least misleading, Explain why in each case. 1. A capital investment opportunity offering a 10% discounted cash flow rate of return is an attractive project if it can be 100% debt financed at an 8% interest rate. X risky typy low oferteral offer 2. The more debt the firm issues, the higher the interest rate it must pay. That is one important reason why firms...
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