Corporate Finance Assignment 5

FINANCE2A First Question

2.122The financing choice is vital to every firm, as the optimal capital structurebetween debt and equity impacts the value of the firm as well as its share price.However, financial managers are often unclear on the benefits of financialleverage.Required:Explain, with the use of an example, how financial leverage benefits the returns ofthe business.

A. Operating expenses are a function of:      a. The cost of equity and the cost of debt      b. The interest rates on debt and the amount of debt      c. Design(s) of the value propositions, the skill level and processes for spending money to operate the company, and the loan term bond yield + the equity risk premium + risks specific to the company      d. Design(s) of the value propositions, processes used to produce the value proposition(s), and the skill level and processes for spending money to operate the company   B. Which of the following is most closely associated with margin as a %?      a. Sales revenue      b. The processes used to produce the company’s value proposition(s)      c. The proportion of debt and equity in the company’s capital structure      d. The average operating assets of the company   C. Which of the following is most closely associated with asset utilization?      a. The cost of equity      b. Expenses      c. Operating assets…

21 Which of the following best describes the efficiency ratios? OOOO Review Later These ratios measure how efficiently a company is utilizing its assets and resources. These ratios measure the company's ability to pay both short-term and long-term debt. These ratios evaluate the ability of a company to generate income relative to revenue, assets, operating costs, and equity. These ratios measure the amount of capital that comes from debt. They show how solvent the company is.

37. Lis/are a way to raise capital by selling ownership or equity: A. Issuing Stock B. Seeking Early-stage capital C. Issuing Bonds D. Developing profits E. Seeking a Bank Loan 38. is/are a way to raise capital through borrowing: A. Issuing Stock B. Seeking Early-stage capital C. Issuing Bonds D. Developing profits E. Mutual Funds 39. If a firm's revenues are greater than costs, then the business would be considered:

Managing companies to a Target Optimal Capital Ratio requires which of the following for managers to think through debt has the cheapest cost of capital, but adding too much will increase cost of debt and cost of equity cost of debt requires confidence in achieving certain credit ratings, resulting in better debt cost confidence cost of equity requires estimates on risk, returns and growth expectations on tax rates being relatively stable all of the above

which one is correct please confirm? QUESTION 3 A firm is considering the purchase of assets that will increase its fixed operating costs. The firm should decrease the proportion of ____ it employs in its capital structure if it wants to maintain its existing degree of combined leverage.   a. common stock   b. common stock and warrants   c. warrants   d. debt

The cost of equity is ________. Group of answer choices A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover

Question 2

TOPIC: Introduction to Financial Management  1. Which of the following can be accepted as main points to note when it comes to a company's financial objective? O It is generally accepted that the main financial objective of a company should be to maximize (or at least increase) shareholder wealth. O There are practical difficulties in selecting a suitable measurement for growth in shareholder wealth. Financial targets such as profit maximization and growth in EPS might be used, but no financial target on its own is ideal. O Financial performance is therefore assessed in a variety of ways: by the actual or expected increase in the share price, growth in profits, growth in EPS, and so on.  2. Which of the following statement/s depicts agency relationships and conflicts?  I. The owners expect the agents to act in the best interests of the owners. Ideally, the 'contract' between the owners and the managers should ensure that the managers always act in the best interests of the…

6. Factors that affect the cost of capital equation Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm's control? Check all that apply. Tax rate The inflation rate The firm's capital budgeting decision rules The impact of cost of capital on managerial decisions Consider the following case: Acme Manufacturing Corporation has two divisions, L and H. Division L is the company's low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company's high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division H is considering a project with an expected return of 12%. Should Acme Manufacturing Corporation accept or reject the project? Accept the…

What is the blend of long-term financial sources used to finance the firm which may include debt, equity ?and preferred stock اخترأحد الخیارات a. Working Capital O b. Profit Maximization c. None of the option d. Risk and Return e. Capital Budgeting O

The cost of equity is ________.   a.equal to the amount of asset turnover b.the interest associated with debt c.the weighted average cost of capital d.the rate of return required by investors to incentivize them to invest in a company