Cost of Capital MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Cost of Capital, a fundamental topic in the field of Financial Management and Financial Markets. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Cost of Capital MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Cost of Capital mcq questions that explore various aspects of Cost of Capital problems. Each MCQ is crafted to challenge your understanding of Cost of Capital principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace Financial Management and Financial Markets tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Cost of Capital MCQs are your pathway to success in mastering this essential Financial Management and Financial Markets topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Cost of Capital. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Cost of Capital knowledge to the test? Let's get started with our carefully curated MCQs!

Cost of Capital MCQs | Page 5 of 6

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Q41.
The historical growth rates, analysis forecasts and retention growth model are the approaches to estimate
Discuss
Answer: (b).growth rate
Q42.
In weighted average cost of capital, the cost of capital which is risk adjusted and developed for each category of
Discuss
Answer: (b).industry [industrial] projects
Q43.
In retention growth model, the payout ratio is subtracted from one to calculate
Discuss
Answer: (c).retention ratio
Q44.
If the retention rate is 0.68 then the payout rate will be
Discuss
Answer: (c).0.32
Q45.
The cost of common stock is 15% and the bond yield is 10.5% then the bond risk premium will be
Discuss
Answer: (d).0.045
Q46.
The cost of equity which is raised by reinvesting earnings internally must be higher than the
Discuss
Answer: (b).cost of new common equity
Q47.
The dividend per share is $15 and sell it for $120 and floatation cost is $3.0 then the component cost of preferred stock will be
Discuss
Answer: (c).0.1282
Q48.
In the pure play method, a company can calculate its own cost of capital with the help of averaging an
Discuss
Answer: (b).other company beta
Q49.
The capital budgeting decisions are analyzed with the help of weighted average and for this purpose
Discuss
Answer: (c).cost of capital is used
Discuss
Answer: (a).interest rate-tax savings
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