APU FINC600 Week 4 Quiz (2016 Version) /Verified Answer/All correct/Score 100%

APU FINC600 Week 4 Quiz (2016 Version)




Question 1 of 10

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

I) Always correct

II) Always incorrect

III) Correct for projects that are about as risky as the average of the firm's other assets

A.I only

B.II only

C.III only

D.I and III only

Question 2 of 10

Which of the following type of projects has average risk?

A. Speculation ventures

B. New products

C. Expansion of existing business

D. Cost improvement

Question 3 of 10

The market value of Cable Company's equity is $60 million, and the market value of its risk-free

debt is $40 million. If the required rate of return on the equity is 15% and that on the debt is 5%,

calculate the company's cost of capital. (Assume no taxes.)