If the required rate of return on a bond is less than the bond's coupon interest rate, then the bond is valued at

		par value
		a discount
		a premium
		the coupon payment

A company's perpetual preferred stock currently sells for $105,000 per share, and it pays an $8.00 annual dividend. If the company were to sell a new preferred issue, it would incur a floatation cost of 5.00% of the issue price. What is the firm's cost of preferred stock?

		6.18%
		8.02%
		9.14%
		9.70%

DDR Enterprises is evaluating the following capital budgeting project

Project Initial Investment CF₁ CF₂ CF₃

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EFG -$1600 $800 $700 $500

What is the project's payback period?

		2.0 years
		2.2 years
		2.3 years
		3.0 years

A company will have a capital appropriations process because of

		projects with unequal lifetimes
		capital rationing
		high risks
		nonconventional (nonnormal) cash flows

The break point is the

		point in time when a company defaults on its debt
		point at which a new issue of stock is sold out
		point at which a company runs out of retained earnings.
		point when a company changes its optimal capital structure.