COMM 203 Study Guide - Final Guide: Opportunity Cost, Market Price, Risk-Free Interest Rate
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Answer: (b : the target capital structure is the debt-equity mix that, maximizes the cost of capital, minimizes the cost of debt financing. Answer: (b : in the dividend growth model formula, g is defined as the, most recent increase in the firm"s dividend, historical growth rate of a firm"s dividends, expected growth of a firm"s sales. Answer: (d : which of the following is/are true: the cost of capital _______________________, is an opportunity cost that depends on the use of the funds, not the source. Ii. is the same thing as the required rate of return. Iii. is the same as the wacc for projects with equal risk to the firm as a whole. Iv. is also known as the appropriate discount rate: ii and iii only. Answer: (e : which of the following formulas correctly describes the cost of equity capital, re = d0/p0 + g.
