Cost of Capital Workbook
Chapter One
Defining Cost of Capital
This chapter presents a variety of concepts about the nature of cost of capital and how
measured.
MULTIPLE CHOICE QUESTIONS
1. Cost of capital usually is expressed:
a. In percentage terms, as a percentage of the face value of the investment.
b. In percentage terms, as a percentage of the amount invested.
c. In dollar terms, in real dollars.
d. In dollar terms, in nominal dollars.
2. The components of a company's capital structure include:
a. Accounts payable, long-term debt, and preferred stock.
b. Accounts payable, preferred stock, and common stock.
c. Accounts payable, long-term debt, and common stock.
d. Long-term debt, preferred stock, and common stock.
3. Cost of capital for an acquisition or a project is a function of:
a. The company's marginal overall cost of capital.
b. The company's average overall cost of capital.
c. The company's marginal cost of equity capital.
d. The investment (the use to which the capital is put).
4. Which of the following items are referred to as the "time value of money"? ... read full excerpt from Cost of Capital Workbook, 2nd Edition ebook
