1. The capital asset pricing model uses three variables to evaluate required returns on common equity: the risk-free rate, the beta coefficient, and the market risk premium.

2. A firm's cost of capital is influenced by current ratio.

3. Two projects that have the same cost and the same expected cash flows will have the same net present value.

4. If the net present value of a project is zero, then it must be accepted.

5. Financial leverage affects a firms earnings per share but not the firms return on equity.