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QUESTION 7 The cost of equity for an unlevered firm is 10%. The firm's cost of debt is 5%. If the tax rate is 25%,
QUESTION 7 The cost of equity for an unlevered firm is 10%. The firm's cost of debt is 5%. If the tax rate is 25%, what is the firm's cost of equity if they increase their debt ratio to 30%? 12.7% 11.6% 8.5% 10.0% QUESTION 8 Beta is a measure of a stock's systematic risk exposure to systematic risk a stock's risk premium exposure to the time value of money QUESTIONS In a discussion with your boss, a colleague says, "A project's cost of capital is represented by the perceived riskiness of the future cash flows generated by the project. It also represents what investors are paying through opportunity cost in order to provide capital to the project. It is important to always adjust the cost of capital to reflect the impact of taxes." Which part of the above statement is false? the statement regarding perceived riskiness The entire statement is True the statement about investor's opportunity cost the statement regarding tax-adjustements QUESTION 10 The following presents the balance sheet for Firm K. Calculate the Quick Ratio for Firm K. Total Assets: 2,000 o Current Assets: 600 Cash: 100 Receivables: 200 Inventory: 300 o Noncurrent Assets: 1,400 . Net PP&E: 1,100 Other NCA: 300 Total Liabilities: 1,500 Current Liabilities: 700 . Current Debt: 250 - Payables: 300 Accruals: 150 o Noncurrent Liabilities: 800 . Long Term Debt: 800 Total Equity: 500 o Common Stock 400 o Retained Earnings 100 0.57 0.86 1.33 0.43
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