Reference no: EM132842235

Problem 1: Which of the following factor must be considered when determining appropriate cost of capital for a project?

Select one:

a. The risk free rate of the project.

b. The type of liability (current or fixed) used in the project.

c. The market risk premium of the security.

d. The risk associated with the project

Problem 2: As a result of a company's 20% increases in sale, its EBIT increased by 30%. What is the company's operating leverage?

Select one:

a. 2.10

b. 1.20

c. 1.50

d. 2.30

Problem 3: The risk-free rate is 7% and the expected return on a market portfolio is 14%. If a share has a beta of 1.5, what is its expected return of a share?

Select one:

a. 14%

b. 18.5%

c. 16.5%

d. 17.5%