1. The cost of equity share or debt is called the specific cost of capital. When specific costs are combined, then we arrive at____

2. Statement I:
Where earnings, dividends, and equity share price all grow at the same rate, the cost of equity capital may be computed by the dividend growth method.
Statement II:
When the risk-free rate is added to the market rate of the return risk premium for the stock is arrived.
Select the correct answer from the options given below:

3. During the planning period, marginal cost to raise new debt is classified as___

4. How you will calculate expected dividend Le. dividend at the end of year one?

5. Which of the following is not a recognized approach for determining the cost of equity?

6. A firm’s overall cost of capital:

7. Which of the following formula you will use while calculating the value of the firm?

8. Cost of equity share or debt is called ___

9. Key sources of value (earning an
excess return) for a company can be attributed primarily to

10. Which of the following model/ method makes use of Beta (β) in the calculation of the cost of equity?

11. Mona Industries has a capital structure of 55% common stock, 10% preferred stock, and 45% debt. The firm has a 60% dividend payout ratio, a beta of 0.89, and a tax rate of 38%. Given this, which one of the following statements is correct?

12. CAPM describes the between risk and returns for securities.

13. An interest rate that is paid by a firm as soon as it issues debt is classified as pre-tax –

14. Type of cost which is used to raise common equity by reinvesting internal earnings is classified as

15. Assertion (A):
The cost of share capital would be based upon the expected rate of earnings of a company.
Reason (R):
Each investor expects a certain amount of earnings, whether distributed or not from the company in whose shares he invests.
Select the correct answer from the options given below:

16. Statement I:
The cost of retained earnings is the opportunity cost of dividends forgone by shareholders.
Statement II:
The opportunity cost of reserve & surplus may be considered as their cost, which is equivalent to the income that would otherwise earn by placing these funds in alternative investment.
Select the correct answer from the options given below:

17. ____ is the rate of return associated with the best investment opportunity for the firm and its shareholders that will be forgone if the projects presently under consideration by the firm were accepted.

18. Statement I:
The cost of equity capital is the rate of return that equates the present value of expected dividends with the market share price.
Statement II:
The dividend Yield Method cannot be used to calculate the cost of equity of units suffering losses.
Select the correct answers from the options given below.

19. The cost of equity which is raised by reinvesting earnings internally must be higher than the –

20. In which of the cost of the following method of equity capital is computed by dividing the dividend by market price per share or net proceeds per share?

21. Select which of the following statement is correct?
(I) Capital budget decision largely depends on the cost of capital of each source.
(II) Capital structure is the mix or proportion of the different kinds of short-term securities.
(III) Cost of capital helps to evaluate the financial performance of the firm.
(IV) As per MM approach, the cost of equity (Ke) is equal to the capitalization rate of the pure equity stream minus a premium for business risk.
Select the correct answer from the options given below:

22. Marginal cost____

23. In weighted average cost of capital, capital components are funds that are usually offered by:

24. While calculating WACC on a market value basis which of the following is not considered –

25. Which of the following method of cost of equity is similar to the dividend price approach?