In calculating the proportional amount of equity financing employed by a firm, we should use: the common stock equity account on the firm's balance sheet. Borrowing from banks, c. Long-term bonds, d. Kimberly uses $500,000 of 12.0 percent debt financing, and the cost of equity to an unlevered firm in the same risk class is 16.0 percent. A way to analyze whether debt or lease financing would be preferable is to: C. A person who initially started a firm and currently has management control over the cash flows of the firm due to his/her current ownership of company stock. Financial decision is important to make wise decisions about when, where and how should a business acquire fund. an example of "moderate risk -- moderate (potential) profitability" asset financing. Which one of the following is a source of cash for a tax-exempt firm? B. 9. Financing a long-lived asset with short-term financing would be. Finance Basics MCQs systematically covers fundamental part of business finance, financial management and corporate finance... Visit the post for more. the book value of the firm. Chapter 12—A Firm's Sources of Financing MULTIPLE CHOICE 1. this is a type of financing unaffected by changes in tax law. Compared to firms that provide a good lifestyle for the owner but little in the way of attractive returns, a firm with potential for high growth and large profits has _____ possible sources of financing. A firm is considering three investment projects which we will refer to as A, B, and C. Each project has an initial cost of $10 million. d) Market Share 2.22..2. leasing is a renewable source of intermediate-term funds. What is the value of the firm according to MM with corporate taxes? On The Firm’s Balance Sheet, Long-term Debt Went From $1 Million At The End Of 2008 To $2 Million At The End Of 2009. 3. ... C. $1 million source of cash in financing activities D. $1 million use of cash in financing activities E. $1 million use of cash in operating activities. Any person or entity that has voting rights based on stock ownership of a corporation. the current market price per share of common stock times the number of shares outstanding. a. Because a firm tends to profit most when the market estimation of an organization’s share expands and this is not only a sign of development for the firm but also it boosts investor’s wealth. Any person or entity that owns shares of stock of a corporation. MCQ of Corporate Finance 1.11..1. is the amount of current assets required to meet a firm's long-term minimum needs. A stakeholder is: A. Question: T-16 Multiple Choice 16. Which one of the following terms is defined as the management of a firm's long-term investments? The firm's cost of capital is 6% if it borrows $10 million, 10% if it borrows $20 million, and 15% if it borrows $30 million. D. Financing Decision. Investment A offers an expected rate of return of 16%, B of 8%, and C of 12%. Multiple Cholce Increase In accounts recelvable Increase In depreclation Decrease In accounts payable Increase In common stock Increase In Inventory includes accounts payable. Which of the following is not one of the three fundamental methods of firm valuation? c) Balance sheet - where the firm is valued in terms of its assets. 34. a) Discounted Cash flow b) Income or earnings - where the firm is valued on some multiple of accounting income or earnings. Introduction to Corporate Finance. an example of "low risk -- low (potential) profitability" asset financing. 4. Multiple Choice Questions. The largest source of long-term financing for U.S. firms for the last 40 years has been: a. Reinvestment of profits, b. 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