Which one of the following best explains why RD is multiplied by (1-T) when computing the Weighted Average Cost of Capital? the tax deductibility of interest expense on debt reduces the overall cost of debt Rd is generally lower than Re for a given firm O dividends on common stock are optional O interest expense on debt is a non-cash expense and must be added back to Net Income O to account for the cost of preferred stock Question 2 0.5 pts If a project has cash flows that alternate from negative to positive to negative again, the main concern in that situation would be: (choose the single best response) O the possibility of multiple IRRS o that the cash flow estimates are incorrect O that net working capital needs are not being met that the IRR will be negative O the possibility that the NPV estimate will not take into account the time value of money Question 3 0.5 pts Which one of the following describes the relationship between the cost of debt and cost of equity? O the pre-tax cost of debt is usually less than the cost of equity O the after-tax cost of debt is usually higher than the cost of equity Othey usually cancel each other out Othey are inversely related Question 4 0.5 pts Which two techniques are used most often in firms' capital budgeting practices? O NPV & IRR O NPV & discounted payback O IRR & YTM O payback & real options analysis O payback & scenario analysis