Choose the correct. The cost of debt capital is calculated on the basis of: A. Net proceeds B. Annual Interest C. Capital D. Arumal Depreciation
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| A. |
Net proceeds |
| B. |
Annual Interest |
| C. |
Capital |
| D. |
Arumal |
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- Define each of the following terms: Weighted average cost of capital, WACC; after-tax cost of debt, rd(1 – T); after-tax cost of short-term debt, rstd(1 – T) Cost of preferred stock, rps; cost of common equity (or cost of common stock), rs Target capital structure Flotation cost, F; cost of new external common equity, reWhich one of the following is the best indicator of long-term debt paying ability? A)Working capital turnover. B)Asset turnover. C)Current ratio. D)Debt to total assets ratio.Interest revenue for debt investments at fair value through other comprehensive income is computed based on the instruments’ a. face value using the effective interest rate. b. face value using the nominal interest rate. c. carrying amount using the effective interest rate. d. carrying amount using the nominal interest rate.
- a) Calculate the after-tax cost of debt for each capital structure.The ratio establishes the relationship between fixed assets and long-terms funds is [A] current ratio [B] fixed assets ratio [C] fixed assets turnover ratio [D] debt equity ratioWhich of the following are acceptable criteria for determining the weights in the weighted average cost of capital? A. Market value of the capital structure and historical costs of financing. B. Using book values of the capital structure and the prior level of debt and equity. C. Market value of the capital structure and historical costs of financing. D. Using the after-tax cost of debt and the market value of the capital structure.
- Which of the following is typically recorded at its present value? a. long-term investments b. long-term liabilities c. intangible assets d. contigent liabilitiesIn question C there is a plot of of cost of debt, cost of equity and cost of capital. Can you show how r_a is calculated to be 0.18667? r_d = Cost of debt r_a = cost of capital r_e = Cost of equityA gain or loss from debt restructuring should be A. treated as increase or decrease in Paid-in Capital B. recognized in income of the period of restructuring C. amortized over the remaining original life of the restructured loan D. allocated between the portion that is an increase (decrease) in Paid-in Capital and a portion that is recognized in the current income
- Which ratio indicates the proportion of assets financed out of shareholders’ funds? (A) Debt equity ratio. (B) Fixed assets turnover ratio. (C) Proprietary ratio. (D) Total assets to debt ratio.The factor payment for the use of financial capital (loans and equity investments) is called... (a)Interest and dividends. (b)Wages. (c)Rent. (d)Profit.The financial capital concept requires that net assets shall be measured at current cost adjusted for changes in purchasing power historical cost adjusted for changes in purchasing power historical cost current cost
