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Company Cost Quiz

The term cost of capital for a project depends on:

If a firm uses the same company cost of capital for evaluating all projects, which of the following is likely?

Using the company cost of capital to evaluate a project is:

Which of the following type of projects has the lowest risk?

Hurdle rate for capital budgeting decisions is:

When a firm increases debt in the capital structure:

If a company changes its financial structure:

The market value of Charter Cruise Company's equity is $15 million, and the market value of its risk-free debt is $5 million. If the required rate of return on the equity is 20% and that on the debt is 8%, calculate the company's cost of capital. (Assume no taxes.)

The beta of debt is 0.4 and beta of equity is 1.2. The debt-equity ratio is 0.8. Calculate the beta of the assets of the firm. (Assume no taxes.)

A project has an expected cash flow of $300 in year 3. The risk-free rate is 5%, the market risk premium is 8% and the project's beta is1.25. Calculate the certainty equivalent cash flow for year3.

Tagged as: company cost, company cost, project
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