10. Using the Capital Asset Pricing Model (CAPM), the cost of common stock equity (Rs) is the return required by investors as compensation for the firm's non diversifiable risk a. TRUE b. FALSE 11. When making replacement decisions, the development of relevant cash flows is complicated when compared to expansion decisions, due to the need to calculate cash flows a. conventional b. non-conventional c. incremental d. initial 12. Now Sartell Corporation is considering expanding operations to meet our growing demand. With the capital expansion, the current accounts are expected to change. Management expects cash to increase by $10,000, accounts receivable by $20,000, & inventories by $30,000. At the same time accounts payable will increase by $40,000, accruals by $30,000, & long-term debt by $80,000. The change in net working capital is a. An increase of $10,000 b. A decrease of $10,000 c. A decrease of $90,000 d. An increase of $80,000 13. If a firm is subject to capital rationing, it's able to accept all independent projects that provide an acceptable return a. TRUE b. FALSE