Quiz Ch 14 – Cost of Equity in Relation to Debt-Equity Ratio
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
13th Edition
How is a firm’s cost of equity affected by a debt-equity ratio of 0.36?
How is a firm’s cost of equity affected by a debt-equity ratio of 0.36?
How is a firm’s cost of equity affected by a debt-equity ratio of 0.48?
What factors should be considered when determining the appropriate discount rate for a capital project proposal?
How do flotation costs impact the evaluation of a project?
What influences the cost of capital when evaluating a capital project proposal?
Which action will reduce a firm’s cost of equity in the security market line approach, given a $2.40 annual dividend, a beta of 1.42, and all other factors remaining constant?
Which action will raise a firm’s cost of equity in the security market line approach, given a $3.36 annual dividend, a beta of 1.38, and all other factors remaining constant?
What actions does a firm take when using the subjective approach to project analysis?
What is the potential impact on a firm’s overall cost of capital, company value, and shareholder value when assigning unique discount rates based on project risk levels during the evaluation of capital project proposals?
What can be concluded when using the capital asset pricing model approach to value equity?