Q12. Stolzenbach Technologies has a target capital structure of 60% equity and 40% debt. The schedule of financing costs for the Stolzenbach is shown in the table below: Amount of New Debt (in millions)
| After-tax Cost of Debt
| Amount of New Equity (in millions)
| Cost of Equity
| $0 to $199 | 4.5% | $0 to $299 | 7.5% | $200 to $399 | 5.0% | $300 to $699 | 8.5% | $400 to $599 | 5.5% | $700 to $999 | 9.5% |
Stolzenbach Technologies has breakpoints for raising additional financing at both: A) $500 million and $700 million. B) $500 million and $1,000 million. C) $400 million and $700 million.
Q13. A firm with a debt to equity ratio of 0.5 and a dividend payout ratio of 40% projects earnings to be $20 million. Which of the following choices is closest to the retained earnings/new equity break point? A) $18.0 million. B) $29.9 million. C) $16.8 million.
Q14. Which one of the following statements about the marginal cost of capital (MCC) is most accurate? A) The MCC is the cost of the last dollar obtained from bondholders. B) A breakpoint on the MCC curve occurs when one of the components in the weighted average cost of capital changes in cost. C) The MCC falls as more and more capital is raised in a given period.
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发表于 2009-1-22 09:59
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