In capital budgeting analysis, when computing the weighted average cost of capital, the CAPM approach is typically used to find which of the following?

Select one:

a. after-tax component cost of debt

b. market value weight of equity

c. component cost of internal equity

d. pretax component cost of debt

If the NPV (Net Present Value) of a project with one sign reversal is positive, then the project's IRR (Internal Rate of Return) ________ the required rate of return.

Select one:

a. must be less than

b. could be greater or less than

c. must be greater than

d. cannot be determined without actual cash flows

Which of the following differentiates the cost of retained earnings from the cost of newly-issued common stock?

Select one:

a. the cost of the pre-emptive rights held by existing shareholders

b. the larger dividends paid to the new common stockholders

c. the greater marginal tax rate faced by the now-larger firm

d. the flotation costs incurred when issuing new securities

An increase in a corporation's marginal tax rate will cause the corporation's after tax cost of debt to increase, other things remaining the same.

Select one:

True

False

Using the weighted cost of capital as a cutoff rate assumes that the riskiness of the project being evaluated is similar to the riskiness of the company's existing assets.

Select one:

True

False