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Cost of Capital Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. What is the best definition of cost of capital?

Question 2 2. The Tire Factory wants to issue a bond, in addition to the cost of interest, what are additional costs associated with bonds?

Question 3 3. How are financial policies and cost of capital linked?

Question 4 4. Which of the following would give an investor an inaccurate calculation of expected growth rate?

Question 5 5. Suzie wants to raise capital to buy a new piece of equipment that will generate increased revenue. Suzie is the sole owner of the company and she likes it that way. How can she raise capital for the equipment?

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Question 6 6. Which of the following is accurate regarding the dividend growth model?

Question 7 7. How do preferred stocks differ from common stocks?

Question 8 8. Which typically have the lowest costs associated with it?

Question 9 9. In the dividend growth model formula, D represents which of the following?

Question 10 10. After a lot of analysis, Maryanne decides to invest in new equipment for her company. How will Maryanne's decision affect her company? Choose the best answer.

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Question 11 11. A company has a return on equity of 12% and a dividend payout ratio of 25%. What is its sustainable growth rate?

Question 12 12. What resources can a company use as part of its capital structure to finance its business?

Question 13 13. In financing with debt, who are the two main creditors?

Question 14 14. What is the value of a stock that pays $1.50 in dividends if the required rate of return is 10% and the dividend is expected to grow at 5%?

Question 15 15. When creating an expenditure budget, why would cost of capital be an important consideration?

Cost of Capital Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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