Which of the following statements is FALSE?
A) If we can identify a comparison firm whose assets have the same risk as the project being evaluated, and if the comparison firm is levered, then we can use its cost of debt as the cost of capital for the project.
B) We can calculate the cost of capital of a firm's assets by computing the weighted average of the firm's equity and debt cost of capital, which we refer to as the firm's weighted average cost of capital.
C) The portfolio of a firm's equity and debt replicates the returns we would earn if the firm were unlevered.
D) When evaluating any potential investment project, we must use a discount rate that is appropriate given the risk of the project's free cash flow.
Answer: A
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The following information is available for Cubic Company before closing the accounts. After all closing entries are made, what will be the balance in the Retained earnings account? Net income$101,200?Retained earnings 98,000?Dividends 35,000?
A. $199,200. B. $230,400. C. $841,800. D. $164,200. E. $101,200.
Most angel investors are individuals who accumulated their wealth through inheritance.
Answer the following statement true (T) or false (F)
Evan owns 45% of Yolo Corporation and 40% of Xeqz Corporation. Farra owns 37% of Yolo Corporation and 48% of Xeqz Corporation. Gao owns 5% of Yolo Corporation but does not own any stock in Xeqz. Each corporation has only one class of stock. Yolo and Xeqz Corporations form a(an)
A. brother-sister controlled group. B. combined controlled group. C. parent-subsidiary controlled group. D. unrelated group of corporations.
In a brand licensing arrangement, the licensee is responsible for
A. providing the brand name to another organization for use in promoting products. B. collecting the royalties from sales of the licensed products. C. half of the financial losses in the event that the licensed brand is a failure. D. the production, but not the marketing of the licensed product. E. the manufacturing, marketing, and financing of the licensed product.