Cfin 5 - Study guides, Class notes & Summaries

The advantage of using the marginal cost of capital as a company's average hurdle rate is correct answers capital market estimations of risk are probably more objective than the company's, it reflects the incremental cost of funding future investments, and it is the basis of the market's assessments of a company's investment decisions It is important for managers to establish an average hurdle rate because:a. hurdle rates are varied in accordance with risk, b. in order to vary hurdle rate...

CFIN EXAM 2 QUESTIONS AND CORRECT ANSWERS (GRADED A+) If the yield curve is downward sloping, what is the yield to maturity on a 10 year Treasury coupon bond, relative to that on a 1-year T-bond? - Answer- The yield on the 10-year is less than the yield on a 1-year bond If the expectations of the term structure of interest rates is correct and if the other term structure theories are somewhat invalid, and we observe a downward sloping yield curve , which of the following is a true statemen...

CFIN Chapter 1 & 2 | Latest Update | 2024/2025 | Already Passed 5 Ratios: 1. liquidity 2. asset management 3. debt management 4. profitability ratios 5. market value ratios A corporation must provide stockholders with a ---- on its operations each yes annual report A firm has a profit margin of 15 percent on sales of $20,000,000. If the firm has debt of $7,500,000, total assets of $22,500,000, and an after-tax interest cost on total debt of 5 percent, what is the firm's ROA? 8....

CFIN Chapter 4 & 5 Quiz Questions and Complete Solutions Graded A+

CFIN 3 CHAPTER 4 TEST QUESTIONS WITH COMPLETE SOLUTIONS GRADED A+ "What is the present value of a perpetuity of $280 per year if the appropriate discount rate is 7 percent? What would happen to the present value of the perpetuity if the appropriate rate rose to 14 percent?" - Answer-nn "PVP = $280/0.07 = $4,000. PVP = $280/0.14 = $2,000. When the interest rate is doubled, the PV of the perpetuity is halved." "Find the amount to which $500 will grow in five years if ...

CFIN 3 Chapter 4 Test Questions with All Correct Answers "What is the present value of a perpetuity of $280 per year if the appropriate discount rate is 7 percent? What would happen to the present value of the perpetuity if the appropriate rate rose to 14 percent?" - Answer- nn "PVP = $280/0.07 = $4,000. PVP = $280/0.14 = $2,000. When the interest rate is doubled, the PV of the perpetuity is halved." "Find the amount to which $500 will grow in five years if the in...

CFIN Chapter 4 & 5 Quiz questions and answers

CFIN 5th Edition by Besley - Test Bank

Unlike physical asset markets, which deal with products such as wheat, autos, real estate, and machinery, financial asset markets deal with stocks, bonds, mortgages, and other claims on real assets with respect to the distribution of future cash flows generated by such assets. *a. True 1. False

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