BUSN 379 Final Exam–SET 02

BUSN 379 Final Exam–SET 02 (JULY 2013 UPDATE)

TOTAL 45 MCQs AND 5 SHORT QUESTIONS IN THE SOLUTION

FIVE IS SHOWN HERE

1. Weak form market efficiency states that the value of a security is based on:

2. Royal Petroleum Co. can buy a piece of equipment that can be financed with debt at an after-tax cost of 8 percent and common equity at a cost of 20 percent. Assume debt and common equity each represent 50 percent of the firm’s capital structure. What is the weighted average cost of capital:

3. An issue of common stock is expected to pay a dividend of $4.80 at the end of the year. Its growth rate is equal to eight percent. If the required rate of return is 13 percent, what is its current price:

4.  Which of the following is true regarding the cost of debt?

5. Retained earnings has a cost associated with it because: