2. A constant dividend growth model assumes that common stock dividends will be paid regularly and grow at a constant rate.

True

False

9. An NPV of zero means that the firms overall value will not change if the new project is adopted because the new project is expected to generate exactly the firms required rate of return.

True

False

18.

On average, the cost of issuing new common equity is higher than the cost of issuing debt.

True

False

19. The component cost of capital is best described as:

	a.	cost of capital issued by a creditor
	b.	cost of capital demanded by the stockholder
	c.	cost of capital provided by a given source
	d.	determined by interest charged