A. TRUE/FALSE QUESTIONS Enter True" or "False" on the blank preceding each question. 2. 1. In general, a firn should invest only in projects that have a rate of return that is lower than the firm's cost of capital. 2. The firm's cost of capital is measured on a pre-tax basis 3. Typically, the after-tax cost of long-term debt for a firm is greater than the cost of preferred stock or common stock 4. There are two forms of common stock financing for a firm: 1) Retained Eanings; and 2) new issues of common stock. S. A finn's "Weighted Average Cost of Capital" (WACC) typically increases as the volume of new capital raised within a given time period increases 6. Breakeven analysis is used to determine the level of operations necessary to cover all operating costs. 2. 3 7. An increase in either the firm's fixed costs (FC) or its variable costs (VC) will cause the firm's operating breakeven point (OBP) in Tunits" to decrease firms headquartered in the U.S accepts one of these indepeodest projects, thems the otber independent project will be eliminated 8. In general, non-U.S, companies have much higher levels of indebtedeess than do 9. ABC Company, Inc. is considering thuo "independenst capital budgeting projects. If the fim from consideration 10. The "Net Preent Valoe (APV) caital badeting metbod meauares bew long (is years and menshs) based ee the project's cash inflows that it takes to recover a prejest's