The discount rate which equates the present value of a capital budgeting project's cash flows to its initial investment is the

		profitability index
		internal rate of return
		cost of capital
		modified internal rate of return

Johncar Corporation has a 9.8% coupon bond outstanding. Interest is paid annually.The bond has $1,000 par value and a maturity of 21 years. If the market return on similar bonds is 12%, what is the value of this Johncar bond?

		$167
		$834
		$1,000
		$1,193

A secured bond is a

		preferred stock
		indenture
		mortgage
		debenture

Which of the following is not a type of equity financing

retained earnings

debentures

common stock

preferred stock

The legal document in which the provisions of a corporate bond are spelled out is the

		indenture
		proxy
		negative pledge clause
		debenture

When faced with capital rationing a company should choose

		the combination of projects with the highest NPV
		the projects with the highest IRRs
		the lowest ranked projects indicated by the Profitability Index
		the projects ranked highest by NPV

he cash flow which is associated with the beginning of a project is the

		book value
		net cash benefit
		initial investment
		change in depreciation

The procedure most companies use to account for differences in the risks of capital budgeting projects is the

		payback period
		net present value profile
		profitability
		risk adjusted discount ratio

The number of shares of common stock received when turning in 1 share of preferred stock is the

		conversion ratio
		participation feature
		preference feature
		cumulative feature

Johncar Corporation's expected dividend for next year is $7.70. It is expected to grow at a 3.2% rate in the future. If you require a 14% rate of return on similar risk investments, what is the value of a share of this common stock?

		$.71
		$55.00
		$71.30
		$73.58