The initial outlay for new project-opportunity cost

Assignment Help Financial Management

Reference no: EM131073252

True or False?

1) A company that sells common stock and uses the money to pay off a loan is increasing its use of financial leverage.

2) the initial outlay for a new project is an example of an opportunity cost.

3) the guiding rule in deciding if a free cash flow is incremental is to look at the company with, versus without, the new project.

4) if a firm imposes a capital constraint on investment projects, the appropriate decision criterion is to select the set of projects that jas the highest positive net present value subject to capital constraint.

Reference no: EM131073252

Questions Cloud

Decides to sell forward its excepted copper production : Suppose CDE mines copper with fixed costs of $0.5/lb and variable costs of $0.4/lb. If CDE decides to sell forward it’s excepted copper production at the 1 year forward price, what is its’s profit 1 year from now, per pound of copper, if the price of..

Net financing in order to keep debt-equity ratio constant : Sallustro, Cira Efor the next fiscal year, you forecast net income of $51,300 and ending assets of $503,800. your firm's payout ratio is 9.9%. your beginning stockholders' equity is $296,800 and your beginning total liability are $120,200. what amoun..

Maturity bond with face value : A 30-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 7.8%. What is the yield to maturity if the bond is selling for $940? What is the yield to maturity if the bond is selling for $1,000?

Bond with coupon rate : You buy a 20-year bond with a coupon rate of 8.8% that has a yield to maturity of 9.8%. (Assume a face value of $1,000 and semiannual coupon payments.) Six months later, the yield to maturity is 10.8%. What is your return over the 6 months?

The initial outlay for new project-opportunity cost : A company that sells common stock and uses the money to pay off a loan is increasing its use of financial leverage. The initial outlay for a new project is an example of an opportunity cost.

New bonds offer in order to sell at face value : General Matter’s outstanding bond issue has a coupon rate of 8%, and it sells at a yield to maturity of 7.00%. The firm wishes to issue additional bonds to the public at face value. What coupon rate must the new bonds offer in order to sell at face v..

Expect the daily return correlation to change : Stock X was just added to the Dow 30 Index. Prior to the addition, the correlation between the daily returns of X and the other 29 stocks in the Index was +0.40. How do you expect the daily return correlation to change after X is added to the Dow 30 ..

Maximum price per share schultz should pay for arras : Schultz Industries is considering the purchase of Arras Manufacturing. Arras is currently a supplier for Schultz, and the acquisition would allow Schultz to better control its material supply. What is the maximum price per share Schultz should pay fo..

More appealing to you from the perspective of each lens : Discuss which company is more appealing to you from the perspective of each lens. Do you feel that additional data are needed to form an informed opinion? What other information would you request to make your decision and why?

User Account

All Pages