Homework Answers
Their are various factor for determining the cost of capital
1. Income Tax Rates
2. Capital Structure of the Firm
3. Economic Conditions
4. The most important factor is the risk level of the department of person proposing the project.
So answer is d (Risk level of the division within the firm that is proposing the project)
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Which one of the following is the key factor for determining the cost of capital that...
The discount rate assigned to an individual project should be based on: Multiple Choice the company's...
The discount rate assigned to an individual project should be based on: Multiple Choice the company's overall weighted average cost of capital. the actual sources of funding used for the project. an average of the company's overall cost of capital for the past five years. the current risk level of the overall firm. the risks associated with the use of the funds required by the project.
True or False question The after-tax cost of debt generally increases when a firm's bond rating...
True or False question The after-tax cost of debt generally increases when a firm's bond rating decreases. The weighted average cost of capital for a firm is the discount rate which the firm should apply to all of the projects it undertakes. Assigning discount rates to individual projects based on the risk level of each project may cause the firm's overall weighted average cost of capital to either increase or decrease over time. Other things being equal, the weighted average...
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which are...
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which are factors that a firm cannot control? Check all that apply. The firm's capital budgeting decision rules The firm's dividend payout ratio □ The general level of stock prices Interest rates in the economy The impact of cost of capital on managerial decisions Consider the following case: International Imports (12) has two divisions, L and H. Division L is the company's low-risk division and would...
The cost of capital: Question 19 options: implies that a project will produce a positive net...
The cost of capital: Question 19 options: implies that a project will produce a positive net present value only when the rate of return on the project is less than the cost of capital. will decrease as the risk level of a firm increases. depends on how the funds are going to be utilized. is primarily dependent on the source of the funds used in a project.
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of...
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm's control? Check all that apply. Interest rates in the economy The firm's capital structure The performance of index funds, such as the S&P 500 The impact of cost of capital on managerial decisions Consider the following case: Marston Manufacturing Company has two divisions, L and H. Division L is the company's low-risk division and would have a...
Capital structure decisions include determining: 1. which one of two projects to accept. 2. how to...
Capital structure decisions include determining: 1. which one of two projects to accept. 2. how to allocate investment funds to multiple projects. 3. the amount of funds needed to finance customer purchases of a new product. 4. how much debt should be assumed to fund a project. 5. how much inventory will be needed to support a project.
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of...
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a finn's control? Check all that apply. The firm's capital structure The general level of stock prices The effect of the tax rate on the cost of debt in the weighted average cost of capital equation Wellington Industries has two divisions, L and H. Division L is the company's low-risk division and would have a weighted average cost of...
can someone help me the assignment is due in 1 h please The cost of capital:...
can someone help me the assignment is due in 1 h please
The cost of capital: depends on how the funds are going to be utilized. O is primarily dependent on the source of the funds used in a project. O implies that a project will produce a positive net present value only when the rate of return on the project is less than the cost of capital. O will decrease as the risk level of a firm increases.
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of...
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm's control? Check all that apply. The general level of stock prices O The effect of the tax rate on the cost of debt in the weighted average cost of capital equation The firm's capital budgeting decision rules The impact of cost of capital on managerial decisions Consider the following case: Edinburgh Exports has two divisions, L and...
7. Factors that affect the cost of capital equation Each of the following factors affects the...
7. Factors that affect the cost of capital equation Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm's control? Check all that apply. Interest rates in the economy The performance of index funds, such as the S&P 500 The firm's capital structure The impact of cost of capital on managerial decisions Consider the following case: Acme Manufacturing Corporation has two divisions, L and H. Division L...
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which are factors that a firm cannot control? Check all that apply. The firm's capital budgeting decision rules The firm's dividend payout ratio □ The general level of stock prices Interest rates in the economy The impact of cost of capital on managerial decisions Consider the following case: International Imports (12) has two divisions, L and H. Division L is the company's low-risk division and would...
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm's control? Check all that apply. Interest rates in the economy The firm's capital structure The performance of index funds, such as the S&P 500 The impact of cost of capital on managerial decisions Consider the following case: Marston Manufacturing Company has two divisions, L and H. Division L is the company's low-risk division and would have a...
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a finn's control? Check all that apply. The firm's capital structure The general level of stock prices The effect of the tax rate on the cost of debt in the weighted average cost of capital equation Wellington Industries has two divisions, L and H. Division L is the company's low-risk division and would have a weighted average cost of...
can someone help me the assignment is due in 1 h please
The cost of capital: depends on how the funds are going to be utilized. O is primarily dependent on the source of the funds used in a project. O implies that a project will produce a positive net present value only when the rate of return on the project is less than the cost of capital. O will decrease as the risk level of a firm increases.
Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm's control? Check all that apply. The general level of stock prices O The effect of the tax rate on the cost of debt in the weighted average cost of capital equation The firm's capital budgeting decision rules The impact of cost of capital on managerial decisions Consider the following case: Edinburgh Exports has two divisions, L and...
7. Factors that affect the cost of capital equation Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm's control? Check all that apply. Interest rates in the economy The performance of index funds, such as the S&P 500 The firm's capital structure The impact of cost of capital on managerial decisions Consider the following case: Acme Manufacturing Corporation has two divisions, L and H. Division L...
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