1.The cost of debt is less than the cost of equity.

Select one:

True

False

2.

A firm may initially increase its use of debt without increasing the cost of capital.

Select one:

True

False

3.

If two investments are mutually exclusive, the firm cannot make both investments.

Select one:

True

False

4.

According to net present value, the reinvestment rate is

Select one:

a.

the net present value.

b.

the internal rate of return.

c.

the cost of equity.

d.

the cost of capital.

5.

The net present value method considers

1. the timing of the cash inflows from an investment

2. the cost of an investment

3. the firm's cost of capital

Select one:

a.

2 and 3

b.

1 and 2

c.

1 and 3

d.

1, 2, and 3

6. The weighted cost of capital includes the cost of debt and the cost of equity.

Select one:

True

False

7. For a given set of cash inflows, the more an investment costs, the smaller will be its NPV.

Select one:

True

False