If the marginal cost of capital rises, that suggests the cost of some component of the firm’s capital structure has risen.
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Risk may be incorporated into capital budgeting by 1. incr…
Risk may be incorporated into capital budgeting by 1. increasing an investment’s internal rate of return by risk premium 2. adjusting the cash flows by the probability of occurrence 3. increasing the cost of capital by a risk premium
The owners of a corporation elect the board of directors.
The owners of a corporation elect the board of directors.
The owners of a corporation elect the board of directors.
The owners of a corporation elect the board of directors.
Retained earnings are more expensive than issuing new shares…
Retained earnings are more expensive than issuing new shares because of flotation costs.
The highest credit rating is triple A.
The highest credit rating is triple A.
The net present value assumes that cash inflows are reinvest…
The net present value assumes that cash inflows are reinvested at the net present value.
The net present value assumes that cash inflows are reinvest…
The net present value assumes that cash inflows are reinvested at the net present value.
Stock repurchases
Stock repurchases
Underestimation of the level of assets needed may
Underestimation of the level of assets needed may