QUESTION: 49

The cost of equity capital is all of the following Except:

The minimum rate that a firm should earn on the equity-financed part of an investment
A return on the equity-financed portion of an investment that, at worst, leaves the market price of the stock unchanged
By far the most difficult component cost to estimate
Generally lower than the before-tax cost of debt

Answer(s): D

If the following are balance sheet changes:
$5, 005 decrease in accounts receivable
$7, 000 decrease in cash
$12, 012 decrease in notes payable
$10, 001 increase in accounts payable "use" of funds would be the:

$7, 000 decrease in cash
$5, 005 decrease in accounts receivable
$10, 001 increase in accounts payable
$12, 012 decrease in notes payable

Answer(s): D

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QUESTION: 51

The concept that dollar today is worth more than a dollar received in future. It is:

Time value of money
Compounding
Timeline
Future value

Answer(s): A

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QUESTION: 52

Rule 72 is:

A useful formula for estimating how long it will take to double a sum at a given interest rate
A useful formula for estimating how long it will take to triple a sum at a given interest rate
A useful formula for estimating how long it will take to graphically represent the time value of money
A useful formula for estimating how long it will take to make the future value of deposited money

Answer(s): A

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QUESTION: 49

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QUESTION: 52

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