Basic Concepts in Corporate Finance Online Test

The net present value of an investment is considered to be the effect that investment will have on the value of the investor.

The rate at which an investment's initial cost and its cash flow equal each other is called the __________________.

Which of the following is not one of the elements used in determining the required rate of return on an equity ?

How do we compute the after-tax cost of debt?

A company has common stock with a market value of $1,000,000 and bonds outstanding with a market value of $1,500,000. Its cost of equity is 10 percent and its after-tax cost of debt is 5 percent. What is its weighted-average cost of capital?

A common stock will pay a dividend of $2.00 next year. Investors demand a 20 percent rate of return from the stock. The dividend will grow by 10 percent per year. What is a fair price for the stock today?

Which of the following is not an advantage of using payback period to evaluate capital projects?

A tax-free municipal bond pay 7 percent interest. If an investor is in the 25 percent tax bracket, what is the taxable equivalent yield of the bond?

Which ratios would a short-term creditor be most interested in reviewing?

Which of the following factors is NOT a part of the DuPont Formula?



very good for clearing basics

4363 days 15 hours 28 minutes ago

Barry Sims
Experienced Accounting and Finance Tutor with CPA
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