第六章单元测试
- Which of the following statements is correct? ( )
- In applying the CAPM to estimate the cost of equity capital, which of the following elements is not subject to dispute or controversy? ( )
Which of the following statements is most correct? ( )
Which of the following statements is most correct? ( )
- Allison Engines Corporation has established a target capital structure of 40 percent debt and 60 percent common equity. The current market price of the firm’s stock is P0 = $28; its last dividend was D0 = $2.20, and its expected dividend growth rate is 6 percent. What will Allison’s marginal cost of retained earnings, ks, be? ( )
A:Although some methods of estimating the cost of equity capital encounter severe difficulties, the CAPM is a simple and reliable model that provides great accuracy and consistency in estimating the cost of equity capital.
B:None of the statements above is correct.
C:The DCF model is preferred over other models to estimate the cost of equity because of the ease with which a firm’s growth rate is obtained.
D:Depreciation-generated funds are an additional source of capital and, in fact, represent the largest single source of funds for some firms.
E:The bond-yield-plus-risk-premium approach to estimating the cost of equity is not always accurate but its advantages are that it is a standardized and objective model.
答案:Depreciation-generated funds are an additional source of capital and, in fact, represent the largest single source of funds for some firms.
A:The stock’s beta coefficient, bi
B:The expected rate of return on the market, kM
C:All of the above are subject to dispute
D:The risk-free rate, kRF
E:The market risk premium (RPM)
A:The weighted average cost of capital is calculated on a before-tax basis.
B:The weighted average cost of capital for a given capital budget level is a weighted average of the marginal cost of each relevant capital component that makes up the firm’s target capital structure.
C:All of the statements above are correct.
D:Statements a and c are correct.
E:An increase in the risk-free rate is not likely to increase the marginal costs of both debt and equity financing.
A:Since stockholders do not generally pay corporate taxes, corporations should focus on before-tax cash flows when calculating the weighted average cost of capital (WACC). B:Statements a and b are correct.
C:None of the statements above is correct.
D:When calculating the weighted average cost of capital, firms should rely on historical costs rather than marginal costs of capital.
E:All else equal, an increase in flotation costs will increase the cost of retained earnings.
A:14.3%
B:9.7%
C:13.9%
D:7.9%
E:15.8%
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