The higher the _____________, the higher the financial risk, and the higher the ____________. a. Interest rate, business risk b. Financial leverage, operating risk c. Financial leverage, cost of capital d. Fixed operating cost, financial risk

Q: The internal rate of return (IRR) is The same thing as the cost of capital. The discount rate that…

A: IRR is the internal rate of return. It is the rate at which net present value is equal to zero.…

Q: why an increase in cost of debt will increase cost of capital associated with business risk and…

A: The cost of capital is the minimal rate of return that a company must earn before it may generate…

Q: What is the risk-return tradeoff that arises when . firm manages its working capital? Give tangible…

A: Financial risk is referred as the possibility or chance of losing the investment, basically an…

Q: Projected free cash flows should be discounted at the firm's weighted average cost of capital to…

A: In this question we are required to tell whether the given the statement is True or False and…

Q: Do you agree? Why? (a) High levels of working capital decrease risk and decrease return. (b) High…

A: Working capital refers to the measure of the short-term financial health of the company that…

Q: As the level of risk increases, the corresponding cost of capital (i.e. the return) must…

A: As there is an increase in the risk level, investors would be demanding a higher return on an…

Q: Which of the following statements are true and which are false? o). High breakeven points in capital…

A: o). High breakeven points in capital intensive industries are desirable. True

Q: The risk-return trade-off from investing in current assets refers to an increased risk of:   a.…

A: Explanation:- The risk-reward difference is an exchange concept that connects large risk and large…

Q: Use the DuPont equation to show how working capital policy canaffect a firm’s expected ROE.

A:

Q: a. Calculate the firm's weighted average cost of capital. b. Explain how the firm can use this cost…

A: WACC = Weight of debt * After-tax Cost of debt + Weight of preferred equity * Cost of preferred…

Q: Discuss the advantages and disadvantages of using (a) payback, (b) net present value and (c )…

A: Payback Period: It refers to the period in which the project's or investment's initial cost is…

Q: Which of the following is not meant for the Cost of capital? O a. Cost of capital is the rate of…

A: Kc is the WACC of the entity. It is computed using the Proportionate weight given to the instrument…

Q: A high capital gearing ratio indicates [A] under capitalization [B] over capitalization [C]…

A: Capital gearing Ratio is the term which means the amount of debt the company has relative to its…

Q: Buying assets that yield a return greater than the minimum acceptable hurdle rate is a part of which…

A: The governing concepts that form the basis of corporate finance are known as the core corporate…

Q: Generally, the ____ is considered to be a more realistic reinvestment rate than the ____.   a.…

A: Cost of capital is the required rate for make capital budgeting decision

Q: Match the following ✓ A premium over and above the risk-free rate. A. Financial Leverage ✓ The…

A: Answer -   Match the Following : Particulars   A premium over and above the risk free rate C.…

Q: one of the following is true regarding the business and financial risk: Select one: a. the business…

A: Business risk refers to that type of risk which involves the decline in profitability and stability…

Q: What is the blend of long-term financial sources used to finance the firm which may include debt,…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Which one is more appropriate for cost of retained earning? A. Weighted Average cost of capital…

A: Retained earnings are the part of net income that is not distributed to the shareholders in form of…

Q: The cost of capital is sometimes referred to as the discount rate or the opportunity cost. What it…

A: Cost of capital is very important in capital budgeting decision making.

Q: a. What is STP's unlevered cost of capital? b. What is STP's after-tax debt cost of capital? c. What…

A: a) Total common stock value = 32 * 12 = 384 Total debt = 100 Total value = 384 + 100 = 484 Unlevered…

Q: Suppose a firm invest in proects that are much riskier than its average investments. Do you think…

A: A firm funds its investments either with shareholders' equity or debt. One of the major criteria…

Q: A sound capital structure is a proper mix of debt and equity that helps to: a. Maximize the value of…

A: The capital structure consists of equity and debt used by the company to finance the operation and…

Q: The weights used in calculating the weighted average cost of capital should be based on ________.…

A: Capital structure of the company contains, debt, preferred stock and equity. To get maximum value of…

Q: What is the nominal return associated with an investment in capital, and why?

A: Nominal Return is the amount of money generated by an investment.

Q: Should the weighted average cost of capital be applied uniformly   across the firm to all projects…

A: No, the weighted average cost of capital (WACC) should not be applied uniformly across all the…

Q: Choose from the following that is NOT a major element of the working capital cycle?   A…

A: Working Capital is the difference between the company’s current assets and the current liabilities.

Q: A. Which of the following is most closely associated with the cost of using assets? a. Asset…

A: A. The ratio of total sales or revenue to average assets is known as asset turnover. The asset…

Q: While the Weighted Average Cost of Capital reflects the risk       perceived by in investors the…

A: The real risk is the market place risk perception. It helps in the determination of the price of…

Q: Calculate Times interestearned Return on Financial leverage

A: Ratio analysis: This is the quantitative analysis of financial statements of a business enterprise.…

Q: The WACC is a weighted average of the costs of debt, preferred stock, and common equity. How should…

A: When assessing the efficacy of a corporate financing strategy, analysts use a calculation called…

Q: a) Define financial leverage. b) What is the effect on earnings? c) When is the use of financial…

A: a) When the company using the debt capital in order to increases the assets and conducting the…

Q: A short-term creditor would be interested in A. profitability ratio. B. efficiency ratio. C.…

A: 13. A short-term creditor is the part of current liability to whom the company is obligated to pay…

Q: Define the term, the return on invested capital (RIC)?

A: All investments are made keeping focus on the expected returns that can be generated from it. The…

Q: All else being equal, a company would choose to invest in a capital asset if which of the following…

A: Answer: If the expected accounting rate of return is greater than the required rate of return.

Q: What is the blend of long-term financial sources used to finance the firm which may include debt,…

A: Debt is cheaper source of finance but increases volatility.

Q: When a firm has businesses with different risk profiles, different investments can have different…

A: Business used to have various risk profiles on which the risk profile are majorly gets evaluated…

Q: A firm's overall cost of capital is Select one :. A. Best measured by the cost of capital of the…

A: Capital is referred to as the amount invested by the owner in the organization.