Question: 1The capital structure weights used in computing the weighted average cost of capital: A. remain constant over time unless the firm issues new securities. B.

1The capital structure weights used in computing the weighted average cost of capital: A. remain constant over time unless the firm issues new securities. B. are based on the book values of total debt and total equity. C. are based on the market values of total debt and total equity. D. are restricted to the firm's debt and common stock only

2The cost of preferred stock is computed the same as the: A. return on a perpetuity.

B. pre-tax cost of debt.

C. return on an annuity.

3The weighted average cost of capital (WACC) for a high-end restaurant business:

A. is unaffected by changes in corporate tax rates.

B. is equivalent to the after-tax cost of the firm's debt.

C. should be used as the required return when analyzing a potential acquisition of a fast-food restaurant.

D. is the return investors require on the total assets of the firm.

D. after-tax cost of debt.

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