Fichas
Chapter 13 Cue Cards
Fichas del conjunto (11)
- 1Define Capital StructureFirms mix of long financing (debt and equity)
- 2Define Cost of CapitalReturn the firms investors could expect to earn if they invested in securities
- 3What is the WACCAverage of returns on debt and equity with weights depending on relative market values
- 4Why use market values not book valuesBook values are issued, market values are real
- 5Is debt interest tax deductible T/FTrue
Ya it is - 6How to calculate Market ValueMarket value of a company's bonds is the PV of all coupons and par value discounted at current int rate
- 7Financial Managers use Yield to Maturity on the bond as expected return T/FTrue
- 8Formula for Expected Return on Preferred Stockrpreferred = Dividend / Price preferred
- 9What are flotation costsImplementing financing decisions when evaluating projects
- 10Define Horizon ValueValue at a specified time
- 11Do floatation costs affect WACCNo. They are treated as a negative cash flow in the NPV Calculation