Reference no: EM131545190

1. The cost of capital for a(n) _________________ is referred to as the unlevered cost of capital.

corporate shareholder

governmental entity

private entity

all-equity firm

private individual

2. The discount rate assigned to an individual project should be based on:

I. an average of the firm's overall cost of capital for the past five years.

II. the current risk level of the overall firm.

III. the firm's interest rate for a levered firm.

IV. the actual sources of funding used for the project.

V. none of the above statements is correct.

III and V only

V only

II only

I only

III and IV only

3. Pro forma financial statements for a proposed project should:

I. be compiled on an aggregate basis.

II. include all the incremental cash flows related to the project.

III. generally exclude interest expense.

IV. exclude all project-related fixed asset acquisitions and disposals.

I, II, III, and IV

II and III only

II, III, and IV only

I and II only

I, II, and IV only