Day 26

Question 1

Equation: WACC

Answer 1

Debt portion of WACC = Weight × Rate × (1 - Tax Rate)

MCQ-06987

Question 2

Three elements needed to estimate the cost of equity capital:

Answer 2

1. Current dividends per share (D)
2. Expected growth rate in dividends (g)
3. Current market price per share of Common Stock (P)

MCQ-03920

Question 3

Name the costs relevant to make or buy decisions:

Answer 3

1. Variable labor
2. Variable materials
3. Avoidable fixed costs

MCQ-04271

Question 4

If tax rates decrease, what will happen to the WACC?

Answer 4

Increase

The after tax cost of debt will also increase, thus increasing WACC

MCQ-07791

Question 5

Equation: cost of debt

Answer 5

= Interest Rate × (1 - Tax Rate)

MCQ-05247

Question 6

Equation: Cost of Preferred Stock

Answer 6

= Dividend ÷ Issuance Price

MCQ-08744

Question 7

Equation: Cost of Retained Earnings

Answer 7

K = (D ÷ P) + g

MCQ-03415

Question 8

Equation: Market Risk Premium

Answer 8

= Market Rate - Risk Free Rate

MCQ-07776

Question 9

Utility costs are what type of costs?

Answer 9

Semivariable costs

MCQ-07025

Question 10

Define: Mixed Costs

Answer 10

Costs include both fixed and variable costs

MCQ-03465

Question 11

What type of control: a company has severs in a floodplain, they decide to raise the servers above the floodplain

Answer 11

System Availability Control

MCQ-14515

Question 12

Factors that shift the Supply Curve

Answer 12

ECOST

Expectations
Cost
Other goods
Technology

Question 13

Factors that shift the Supply Curve

Answer 13

ECOST

Expectations
Cost
Other goods
Subsidies
Technology