NAME: ________________________

Question Types

Start With

Question Limit

of 29 available terms

Upgrade to
remove ads

5 Written Questions

5 Matching Questions

  1. before-tax cost of debt
  2. wd, wp, wc
  3. flotation adjustment
  4. re
  5. required rate of return
  1. a ? = rRF + RP
  2. b (adjusted DCF cost) - (pure DCF cost)
  3. c target weights of debt, preferred stock, and common equity. The weights are percentages of the different types of capital the firm plans to use when it raises capital in the future
  4. d the interest rate the firm must pay on new debt
  5. e component cost of external equity. Equal to rs plus a factor that reflects the cost of issuing new stock

5 Multiple Choice Questions

  1. the number of shares of stock outstanding multiplied by the current stock price
  2. rs + (flotation adjustment)
  3. ? = D1/P0 + g
  4. the cost of each component
  5. the percentage cost of issuing new common stock. F

5 True/False Questions

  1. rpcomponent cost of preferred stock, found as the yield investors expect to earn on the preferred stock


  2. cost of retained earningsrs + (flotation adjustment)


  3. weighted average cost of capitalthe interest rate the firm must pay on new debt


  4. after-tax cost of debtthe interest rate the firm must pay on new debt


  5. cost of new common stockthe rate of return investors require on the firm's preferred stock. Rp is calculated as the preferred dividend, Dp, divided by the current price, Pp


Create Set