1. Which of the following is a true of a capital expenditure? A. It is commonly

ID: 2630908 • Letter: 1

Question

1. Which of the following is a true of a capital expenditure?

A. It is commonly used to expand the elevel of operations

B. It is commonly used for current asset expansion

C. It is an outlay made to replace current assets

D. It is an outlay expanded to produce benefits within one year

2. When discussing weighing schemes for calculating the weighted average cost of capital,.....

A. Market value weights are preferred over book value weights and target weights are preferred over historical weights

B. Market Value weights are preferred over book value weights and historical weights are preferred over target weights

C. Book value weights are preferred over market value weights and historical weights are preferred over target weights

D. book value weights are preferred over market value weights and target weights are preferred over historical weights

3.The Before- Tax cost of debt for a firm, which has a marginal tax rate of 40 percent, is 12 percent. The after- Tax cost of debt is___

A. 12%

B. 7.2%

C. 4.8%

D.6.0%

4. The Marginal cost of capital is a relevant cost of capital for evaluating a firm's future investment opportunities.

A. True

B. False

1. B) It is commonly used for current asset expansion

2. A) Market value weights are preferred over book value weights and target weights are preferred over historical weights

3. B) 7.2%

4. A) True

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