Question
1. Which of the following statements about the payback method is true? A. The payback method is always consistent with the goal of shareholder wealth
1. Which of the following statements about the payback method is true?
A. The payback method is always consistent with the goal of shareholder wealth maximization.
B. The payback method represents the number of years it takes a project to recover its initial investment plus a required rate of return.
C. The payback method ignores cash flows after the payback period (later cash flows).
D. The payback method always agrees with the NPV method.
2. When estimating the cost of debt capital for a firm, we are primarily interested in
A. the weighted average cost of equity.
B. the yield to maturity on the debt.
C. the coupon rate of the taxes.
D. the output from the CAPM.
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