Question

16. As the cost of capital increases A fewer projects are accepted B. more projects are accepted. C. project selection remains unchanged. D. None of these 17.An annulty stream where the payments occur forever is called an): A. annuity due B. perpetuity. C. amortized cash flow stream D. none of the above. 18. The higher a firm's debt utilization ratios, excluding debt-to-total assets A less risky the firm's financial position. B. more risky the firm's financial position C. more easily the firm will be able to pay dividends. D. none of these 19. Asset utilization ratios A. relate balance sheet assets to income statement sales. B. measure how much cach is available for investment into current assets. C. are most important to stockholders. D. measures the firm's ability to generate a profit on sales, 20. Capital budgeting decisions generally: A have long-term effects on a firm. Bare of short-duration Crevolve around the decision to use either debt or equity securities to finance a project D.focus solely on whether or not a particular asset should be purchased. Divided e of

Answer 1

Answer 16:
Fewer projects are accepted because NPV of fewer projects will be positive when we discount future values of projects using higher cost of capital

Answer 17:
Perpetuity

Answer 18:
Less risky the firm's financial position

Answer 19:
Relate balance sheet assets to income statement sales

Answer 20:
Have long term effects on a firm