Exam 5 Flashcards
1
Q
Maximum rate without external financing is what?
A
Internal Growth Rate
2
Q
Maximum rate while maintaining the capital structure (no new equity issued and D/E ratio is constant)
A
Sustainable Growth Rate
3
Q
What are determinates of growth?
A
Profit margin, total asset turnover, financial leverage, dividend policy.
4
Q
What are two risk levels?
A
Ability and willingness
5
Q
You think you understand something when you don’t.
A
Risk
6
Q
What are external factors that influence WACC?
A
Interest rates and taxes
7
Q
What are internal factors that influence WACC?
A
Capital structure, dividend policy, and investment policy.
