Principles of Corporate Finance Exam Questions With Verified Answers || Graded A+
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Course
Principles of Corporate Finance
Institution
Principles Of Corporate Finance
Principles of Corporate Finance
Exam Questions With Verified
Answers || Graded A+
Enterprise value multiples - ANSWER Enterprise value
multiples use a measure of earnings before interest payments are
made
• EBIT
• EBITDA
• Free cash flow - Because capital expenditures can...
Principles of Corporate Finance
Exam Questions With Verified
Answers || Graded A+
Enterprise value multiples - ANSWER ✔ Enterprise value
multiples use a measure of earnings before interest payments are
made
• EBIT
• EBITDA
• Free cash flow
- Because capital expenditures can vary between years, most
common is to use enterprise value to EBITDA multiples
compute payout rate - ANSWER ✔
compute retention rate - ANSWER ✔
compute growth rate (if return on investment is known) -
ANSWER ✔
cost of preferred stick capital - ANSWER ✔ preferred dividend /
preferred stock price
long term investments - ANSWER ✔ capital budgeting decisions
, sources of financing (debit vs. equity) for long term investments -
ANSWER ✔ capital structure decisions
short-term assets & liabilities - ANSWER ✔ working capital
decisions
sole proprietorship, partnership, corporation - ANSWER ✔ forms
of an organization
one owner, easy to form personal tax, pay back debts of
business,time for the business is limited, hard to raise money -
ANSWER ✔ sole proprietorship
two or more owners, easy/inexpensive to form, personal taxes,
limited life, hard to raise money - ANSWER ✔ partnership
one or more owners, complicated/expensive to form, corporate
and personal taxes, unlimited life - ANSWER ✔ corporation
maximize the market value of the existing owners equity -
ANSWER ✔ general goal
maximize the market value per share of common stock -
ANSWER ✔ corporate goal
exists whenever one party ("principal") hires another ("agent") to
represent the interest of the principal - ANSWER ✔ agency
relationship
a conflict of interest between the principal & the agent -
ANSWER ✔ agency problem
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