34. The concept of optimum capital structure is based on the assumption that the prudent use of debt can lower the firm's overall cost of capital True or False 35. The cost of common equity is the most difficult concept to measure True or False 36 The optimum capital structure is the one that? 37. Preferred stock is considered as debt to the extent that preferred dividends are a tax-deductible expense True or False 38. The net cash flows from an investment project 39 Beta may be used to classify stocks into which of the two following categories? 40. The capital budgeting process must follow an ideally prescribed order because there are many steps and elements in the whole process of planning capital expenditures. True or False 41. The nominal rate of interest equals the effective rate of interest only if interest is compounded semiannually True or False 42. Efficient capital markets exist when security prices reflect all available information and market prices adjust slowly to new information True or False 43. The cost of retained earnings is slightly lower than the cost of new common stock because retained earnings do not involve flotation costs. True or False 44. The term "annuity" usually refers to a series of annual payments (receipts) of an equal amount, but it may also apply to a payment schedule with various intervals, i.e., such as 30-day interval or 6-month interval. True or False 45. A project with an investment of $10,000 has net cash flows of $9,000, $3,000, and $1,000 for each of the next three years Compute the average rate of return for the project? 46. A company has debt with a market value of $80,000 and common equity with a market value of $120,000. The component costs of the capital structure for the company are 7.4 percent for bond after taxes and 16.4 percent for common equity. What is the weighted average cost of capital for the company? 47. The net present value method, the internal rate of return method, and the profitability index consider the time value of money True or False 48. The value of any security is equal to the compound value of cash. flows expected to be received by the investor. True or False 49. The opportunity cost is the rate of return that the funds could earn if they were invested in the best available alternative project. True or False 50. Discount rate consists of the rate of return on a riskless investment plus a premium based on?