Topic 7: Cost of Capital Flashcards
1
Q
The return the firm’s investors could expect to earn if
they invested in securities with comparable degrees of risk.
A
Cost of Capital
2
Q
The firm’s mix of debt financing and equity
financing.
A
Capital Structure
3
Q
In a “__________________,” the total value of a firm is equal
to the market value of the total cash flows generated by its
assets and is not affected by its choice of capital structure
A
“perfect capital market”
4
Q
Value of Firm (V) =
A
Value of Debt (D) + Value of Equity (E)
