sonce a year, then cur at regular interva intervals OUESTION 8 hich of the following statements is CORRECT? (2 points) 4. If a series of unequal cash flows occurs at regular intervals, such as on series is by definition an annuity. 2. The cash flows for an annuity must all be equal, and they must occur atre such as once a year or once a month. c. The cash flows for an annuity aus annuity due must all occur at the ends of the periods. d. The cash flows for an ordinary (or deferred) annuity all occur at the beginning at the beginning of the periods. Answer: QUESTION 9 ch of the following statements is CORRECT? (2 points) lotation costs are always the same for any type of sources of capital. b. Funds acquired by the firm through retaining earnings have no cost because there are ne dividend or interest payments associated with them, and no flotation costs are required to raise them, but capital raised by selling new stock or bonds does have a cost. c. For capital budgeting and cost of capital purposes, the firm should consider the opportunity costs of retained earnings when they are used as sources of capital. d. For capital budgeting and cost of capital purposes, the firm should always consider retained earnings as the first source of capital (i.e.. use these funds first) because retained earnings have no cost to the firm. Answer: QUESTION 10 Which of the following statements is CORRECT? (2 points) when calculating the cost of debt, a company needs to adjust for taxes, because interest payments are deductible by the paying corporation, b. Because of tax effects, an increase in the risk-free rate will have a greater effect on the after-tax cost of debt than on the cost of common stock as measured by the CAPM. c. When calculating the cost of preferred stock, companies must adjust for taxes, because dividends paid on preferred stock are deductible by the paying corporation. 4. Higher flotation costs reduce investors' expected returns, and that leads to a reduction in a company's WACC. If a company's beta increases, this will increase the cost of equity used to calculate the VACC, but only if the company does not have enough retained earnings to take care of its uity financing and hence must issue new stock. swer