1) The cost associated with each additional dollar of financing for investment projects isA. the incremental returnB. the marginal cost of capitalC. risk-free rateD. beta2) The XYZ Company is planning a $50 million expansion. The expansion is to be financed by selling $20 million in new debt and $30 million in new common stock. The before-tax required rate of return on debt is 9% and the required rate of return on equity is 14%. If the company is in the 40% tax bracket what is the marginal cost of capital?A. 14.0%B. 9.0%C. 10.6%D. 11.5%3) For the NPV criteria a project is acceptable if the NPV is __________ while for the profitability index a project is acceptable if the profitability index is __________.A. less than zero greater than the required returnB. greater than zero greater than oneC. greater than one greater than zeroD. greater than zero less than one4) A zero-coupon bondA. pays no interestB. pays interest at a rate less than the market rateC. is a junk bondD. is sold at a deep discount at less than the par value

Categories: Uncategorized


Leave a Reply

Your email address will not be published. Required fields are marked *