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Question
Which of the following causes a firm's cost of capital (WACC) to differ from an investor's required rate of return on the company's common stock?A) the fact that the risk-free rate of interest has increased
B) the incurrence of flotation costs when new securities are issued
C) The market risk premium exceeds 12%.
D) None of the above the WACC and required return are the same.
Answer
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Related questions
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Current assets would usually NOT include
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B) marketable securities.
C) accounts receivable.
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c. If the bank requires discount interest, what is the annual percentage rate for this financing?
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Dazzly Diamond Corp. called for credit at the Home Alone Bank of Paris, TX. The terms included a $35,000 maximum loan with interest of 1 percent over prime, and the agreement also requires a 15% compensating balance throughout the year. The prime rate is currently 12 percent.
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C) $22,305
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Q:
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B) $84,000
C) $90,000
D) $94,000