Basic Science

1. ------------------------------------------------- If a typical U.S. club correctly estimates its WACC at a given point in time and then uses that very(prenominal) financial cling to of capital to evaluate all projects for the next 10 years, then the firm go out most likely ------------------------------------------------- manage | | last riskier oer time, but its intrinsic value provide be growingd.| | | become less risky over time, and this will maximize its intrinsic value.| | | accept overly many low-risk projects and too a few(prenominal) high-risk projects.| | | become more risky and to a fault ache an increasing WACC.  Its intrinsic value will non be maximized.| | | continue as before, because there is no drive to take do its risk position or value to change over time as a precede of its use of a single cost of capital.| 1. ------------------------------------------------- Which of the following statements is make better? ---------- --------------------------------------- Answer | | When reckon the cost of debt, a company needs to adjust for taxes, because hobby payments are deductible by the nonrecreational corporation.| | | When calculating the cost of prefer stock, companies must adjust for taxes, because dividends paying on preferred stock are deductible by the paying corporation.| | | Because of tax effects, an increase in the risk-free enjoin will have a greater effect on the after-tax cost of debt than on the cost of habitual stock as measured by the CAPM.| | | If a companys genus Beta increases, this will increase the cost of fairness used to weigh the WACC, but only if the company does not have large retained earnings to take care of its equity support and hence must issue newly stock.| | | Higher flotation costs reduce investors expected returns, and that leads to a reduction in a companys WACC.| 2 points   Question 22 1. -------------------------------------------- -----   --------------------------------! -----------------...If you want to get a rise essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper