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- 1. Multiple Choice
A company has cost of debt of 6% and cost of equity of 15%. In this country, the corporate income tax rate is 20%. If the company has target debt to total capital ratio of 40%, its WACC is closest to:
10.9%
11.4%
8.88%
9.6%
- 2. Multiple ChoiceA company has cost of debt of 6% and cost of equity of 15%. In this country, the corporate income tax rate is 20%. If the company increases its debt to total capital ratio to 60%, its cost of equity will:IncreaseDecreaseStay the same
- 3. Multiple Choice
A company is financed with equity and 5-year bonds that have face value of 1,000 and coupon rate of 4%. If each bond is selling for 956.71 today, the company's cost of debt is closest to:
5%
4%
4.5%
5.5%
- 4. Multiple Choice
If the Bank of Thailand raises interest rate, the cost of debt for a company that is financed with fixed-coupon long-term bonds will…
Increase
Decrease
Stay the same
- 5. Multiple Choice
TPI Polene Power's revenue comes from 2 sources: operation of petrol station (13%) and waste-to-energy power plant (87%). Revenue from electricity generation is guaranteed by contract with the government. If TPIPP is considering investment in a new petrol station, its cost of capital...
Should be higher than TPIPP's average cost of capital.
Should the same as all other TPIPP's projects.
Should be lower than TPIPP's average cost of capital.
- 6. Multiple ChoiceA company's cost of capital is mainly determined by…The risk of its underlying businesses.Its relationship with investors.Its choices of sources of capital.The corporate income tax rate.
- 7. Multiple Choice
[HARD] Suppose the market-to-book ratio is 1.5x. From the information provided, the appropriate capital structure for WACC calculation is closest to:
35.3%
26.7%
38.9%
63.6%
- 8. Multiple Choice
[HARD] Suppose the market-to-book ratio is 1.5x. From the information provided, the company's WACC is closest to:
9.9%
10.1%
9.2%
9.5%
- 9. Multiple Choice
[HARD] Suppose EBIT is 250. From the information provided, the company's ROIC is closest to:
11.8%
14.7%
9.8%
13.9%
- 10. Multiple Choice
[HARD] From the information provided and results from earlier questions, if the company's perpetual growth rate of free cash flow is 2%, the enterprise value is closest to: (Hint: you may want to look up the notes on equity valuation.)
2,109
2,027
1,800
1,700
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