Chapter 14 (on final)

decrease in the company's tax rate.

A firm's aftertax cost of debt will increase if there is a(n):

weighted and included in the initial cash flow.

Flotation costs for a levered firm should be:

risks associated with the use of the funds required by the project.

For any given capital project proposal, the discount rate should be based on the:

the weighted average of the flotation costs associated with each form of financing.

The flotation cost for a company is computed as:

the returns currently required by both debtholders and stockholders.

To determine a firm's cost of capital, one must include:

use of the funds raised.

When determining a firm's cost of capital, the most important determinant is the:

depends upon how the funds raised for that project are going to be spent.

When evaluating any capital project proposal, the cost of capital:

The simplicity of the model.

Which of the following is the main advantage of using the dividend growth model to estimate a firm's cost of equity?

It is only as reliable as the estimated rate of growth.

Which of the following statements is accurate regarding the dividend growth model?

It is the return investors require on the total assets of the firm.

Which of the following statements regarding the weighted average cost of capital is accurate?