Question

FIN 301 * 0133020312.pdf * FIN 432 - Investr. * C A long-term Pror * Q Finance Chapter 16 Cah payments /webapps/assessment/take/launch.jsp?course assessment_id=_17709_18_course_id25356.18.content ide 431107.18stepunul QUESTION 40 The weighted average cost of capital is used to 272 points Save Answer a. Discount future cash flows from investment projects b. Determine the dividend paid on common stock Determine the after-tax cost of debt QUESTION 41 Following is the formula for the weighted average cost of capital WACC = T LTD (1-tax rate) W LTD + TPS W PS + r CS WCS Where LTD is long term debt PS is preferred stock CS is common stock In the formula for the weighted average cost of capital, the weights are determined by the firm's a Capital structure b. Chief Financial Officer C. Projected sources of capital for a particular project Save and Submit Sre Al Click Save and Submit to save and submit. Click Save All Answers to save all and 511 PM

Answer 1

40)

WACC of weighted average cost of capital is used to discount future cash flows from investment into a project. This discount rate enables the decision maker to arrive at valuation for the project and to determine if the project can be invested in.

Answer is A) Discount future cash flows from investment projects.

41)

The weights for WACC are determined by the proportion of debt and equity in the capital structure. As WACC is the weighted average cost of capital, the weights are assigned through the amount of debt or equity in the capital structure.

Answer is A) Capital structure