Testování: Test/quiz: Cost of capital

1/9
Risk premium forms part of cost of capital. It does not contain

1 or more correct answers are possible; however, select only one answer.
Maximum possible % gain: 11%

systematic business risk unsystematic business risk financial risk

2/9
Cost of equity can be calculated by using several methods, such as: Capital Asset Pricing Model (CAPM) or Dividend discount model (Gordon growth model). But the result of the two methods can differ. Is this assertion correct?

1 or more correct answers are possible; however, select only one answer.
Maximum possible % gain: 11%

yes no

3/9
Capital Asset Pricing Model (CAPM) can be graphically presented by Security market line (SML). Is this assertion correct?

1 or more correct answers are possible; however, select only one answer.
Maximum possible % gain: 11%

yes no

4/9
What is missing in the CAPM model formula used for calculation of cost of equity?
??? + beta * market risk premium

1 or more correct answers are possible; however, select only one answer.
Maximum possible % gain: 11%

market interest rate market value of equity / number of shares hurdle rate risk-free rate

5/9
Is the calculation of cost of equity right? The last dividend per share was € 0,15, current share price is € 0,89, annual growth rate is 3%. D1 = 0,15 * (1 + 0,03) = 0,1545, Ke = (0,1545 / 0,89) + 0,03 = 0,204 (= 20,4%)

1 or more correct answers are possible; however, select only one answer.
Maximum possible % gain: 11%

yes no

6/9
What is missing in the nominator of Cost of irredeemable (perpetual) debt formula?
**Kd = (??? / debt value) * (1 – tax rate)**

1 or more correct answers are possible; however, select only one answer.
Maximum possible % gain: 11%

total interest paid during the investment payback period interest rate annual interest

7/9
% cost of redeemable debt is calculated

1 or more correct answers are possible; however, select only one answer.
Maximum possible % gain: 11%

the same way as return on assets (ROA) as Kd = (annual interest / debt value) * (1 – tax rate) the same way as internal rate of return (IRR)

8/9
What is the cost % used to value retained earnings?

1 or more correct answers are possible; however, select only one answer.
Maximum possible % gain: 11%

with 0% as retained earnings is for free on the basis of average % cost of debt on the basis of % cost of equity on the basis of % cost of equity

9/9
What is missing in the WACC formula below? Please click to the picture to make it bigger.

1 or more correct answers are possible; however, select only one answer.
Maximum possible % gain: 11%

tax rate rate of transaction costs coefficient of debt availability coefficient beta

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Standard test/quiz no. 405: Testování: Test/quiz: Cost of capital

1/9 Risk premium forms part of cost of capital. It does not contain

2/9 Cost of equity can be calculated by using several methods, such as: Capital Asset Pricing Model (CAPM) or Dividend discount model (Gordon growth model). But the result of the two methods can differ. Is this assertion correct?

3/9 Capital Asset Pricing Model (CAPM) can be graphically presented by Security market line (SML). Is this assertion correct?

4/9 What is missing in the CAPM model formula used for calculation of cost of equity? ??? + beta * market risk premium

5/9 Is the calculation of cost of equity right? The last dividend per share was € 0,15, current share price is € 0,89, annual growth rate is 3%. D1 = 0,15 * (1 + 0,03) = 0,1545, Ke = (0,1545 / 0,89) + 0,03 = 0,204 (= 20,4%)

6/9 What is missing in the nominator of Cost of irredeemable (perpetual) debt formula? Kd = (??? / debt value) * (1 – tax rate)

7/9 % cost of redeemable debt is calculated

8/9 What is the cost % used to value retained earnings?

9/9 What is missing in the WACC formula below? Please click to the picture to make it bigger.

1/9
Risk premium forms part of cost of capital. It does not contain

2/9
Cost of equity can be calculated by using several methods, such as: Capital Asset Pricing Model (CAPM) or Dividend discount model (Gordon growth model). But the result of the two methods can differ. Is this assertion correct?

3/9
Capital Asset Pricing Model (CAPM) can be graphically presented by Security market line (SML). Is this assertion correct?

4/9
What is missing in the CAPM model formula used for calculation of cost of equity?
??? + beta * market risk premium

5/9
Is the calculation of cost of equity right? The last dividend per share was € 0,15, current share price is € 0,89, annual growth rate is 3%. D1 = 0,15 * (1 + 0,03) = 0,1545, Ke = (0,1545 / 0,89) + 0,03 = 0,204 (= 20,4%)

6/9
What is missing in the nominator of Cost of irredeemable (perpetual) debt formula?
**Kd = (??? / debt value) * (1 – tax rate)**

7/9
% cost of redeemable debt is calculated

8/9
What is the cost % used to value retained earnings?

9/9
What is missing in the WACC formula below? Please click to the picture to make it bigger.