Columbia College - FINC 350FINC 350 Chapter 11 - Cost of Capital FINANCE QUESTIONS WITH 99% CORRECT ANSWERS ( TRUE & FALSE QUESTIONS, MULTIPLE CHOICE QUESTIONS AND ESSAY QUESTIONS )

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1. It is standard practice to evaluate investment decisions using the cost of the specific financing method involved. True False 2. The calculation of the cost of capital depends upon historical co... sts of funds. True False 3. The cost of capital for each source of funds is dependent on current market conditions and expected rates of return. True False 4. In determining the cost of debt, yields and prices of outstanding bonds are used. True False 5. The cost of debt is equal to the current bond yield on bonds of similar risk class and adjusted for the corporate tax rate. True False 6. The amount of debt capital used by a corporation is not related to the availability of equity funds from retained earnings and new common stock. True False 7. A firm's cost of preferred stock is equal to the preferred dividend divided by the net price after flotation costs. True False 11-1Chapter 11 - Cost of Capital 8. A firm's cost of preferred stock is equal to the preferred dividend divided by market price plus the dividend growth rate (Kp= D/Po+ g). True False [Show More]

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