Assume that you graph the changes in net present value against the changes in the value of a single variable used in a project. The smoother the resulting function/line illustrates the

	a.	the higher the fixed costs utilized by the project
	b.	the less sensitive NPV is to change in that variable
	c.	the higher the forecasting risk or sensitivity associated with that variable
	d.	the wider the range of total outcomes possible from accepting a proposed project

If a firm has a debt-to-equity (D/E) ratio of 0.45, what are its weight of debt and weight of equity?

	a.	WD = 31%, WE = 69%
	b.	WD = 47%, WE = 53%
	c.	WD = 29%, WE = 64%
	d.	WD = 27%, WE = 60%

In a world with no taxes or bankruptcy costs, which of the following statement(s) concerning capital structure theory is (are) true?

	a.	The value of the firm and its weighted average cost of capital are not affected by capital structures
	b.	By issuing more debt to lower WACC, the fact that the cost of debt is lower than cost of equity is exactly offset by the increase in cost of equity from borrowing, thus leaving WACC unchanged
	c.	Cost of equity will increase with increase in financial leverage
	d.	All of the above statements are true

When we consider corporate taxes and bankruptcy costs, which of the following statement(s) regarding capital structure theory is false?

	a.	As the D/E ratio increases, the probability of bankruptcy decreases
	b.	At optimal capital structure, the increased tax benefit from debt is exactly offset by the increased bankruptcy costs of debt
	c.	Bankruptcy costs reduce the benefits (the interest tax shield) of corporate debt
	d.	Optimal capital structure is part debt and part equity