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FMSM - 4 COST OF CAPITAL

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Marks: 10

Q.   1

 Which of the following is not an assumption of the capital asset pricing model (CAPM)?

Q.   2

 Given: risk-free rate of return = 5 %; market return = 10%; cost of equity = 15%; value of beta (β) is:

Q.   3

 may be defined as the cost of raising an additional rupee of capital:

Q.   4

 Which of the following cost of capital requires to adjust taxes?

Q.   5

 Marginal Cost of capital is the cost of:

Q.   6

 In order to calculate Weighted Average Cost of Capital, weights may be based on:

Q.   7

 Firm’s Cost of Capital is the average cost of:

 

 

 

Q.   8

 A company has a financial structure where equity is 70% of its total debt plus equity. Its cost of equity is 10% and gross loan interest is 5%. Corporation tax is paid at 30%. What is the company’s weighted average cost of capital (WACC)?

Q.   9

 The cost of equity capital is all of the following except:

Q.   10

 What is the overall (weighted average) cost of capital when the firm has ₹ 20 crores in long-term debt, ₹ 4 crores in preferred stock, and ₹ 16 crores in equity shares? The before-tax cost for debt, preferred stock, and equity capital are 8%, 9%, and 15%, respectively. Assume a 50% tax rate.

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