TRUE OR FALSE?

1. Assume ABC Co. has P500.000 in debt at a before-tax rate of 6%, P2.000,000 in equity at a cost of 10%, and a marginal tax rate of 40%. The company's WACC is 9.2% 2. Investors are generally considered to be risk averse. 3. ABC Co. has a portfolio with the following three assets and expected returns: Asset A P2.000.000 6% Asset B P2.000.000 9% Asset C P4.000,000 12% The expected return of the portfolio is equal to 9%1. ABC Co. is trying to decide whether to spend P30,000 for a new piece of equipment. The payback method suggests that this investment is a wise course of action. The internal rate of return method indicates that the investment should not be made. The company will likely acquire the equipment for P30.000 2. Futures are used to manage asymmetric risk and options to manage symmetric risk. 3. The cost of capital and the required rate of return are similar. 4. If the marginal propensity to consume is .80 and the government increases spending by P10 million, the increase in equilibrium GDP is P50.000,0001. The company will pay a nominal rate of interest If ABC Co. goes to a reputable financial institution, 2. If ABC Co. is offered credit terms of 2/10, net/30, the cost of not taking the discount is 26% 3. In a warehousing arrangement. inventory is maintained in the warehouse of the borrower under control of the borrower's warehouse employee. 4. Eurobonds may be a lower-cost option to other debt financing because they have a lower cost of issuance