Practice Quiz

FSOT: 500 Test Prep Study Questions - Question List

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211. A company's cost of equity is 12 percent and its debt ratio is 30 percent. The cost of debt is 7.5 percent and the tax rate is 35 percent. What is the firm's weighted average cost of capital?
  1. 7.71 percent
  2. 9.86 percent
  3. 13.05 percent
  4. 13.46 percent
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212. A business owner expects fixed costs of 12,000, a selling price of 200 per unit, and variable costs of 40 per unit produced. How many units will have to be sold in order for the owner to break even?
  1. 50
  2. 60
  3. 75
  4. 300
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213. A business owner expects fixed costs of 12,000, variable costs of 20 per unit produced, and a total amount sold of 60 units. What is the minimum price the owner has to charge per unit in order to break even?
  1. 150
  2. 200
  3. 300
  4. 600
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214. Discounting future cash flow to the present period is common in capital budgeting. If positive cash flow at the end of year 2 is $132,000, the interest rate for year 1 is 10 percent, and the interest rate for year 2 is 20 percent, the present value of the $132,000 at the beginning of year 1 is
  1. $100,000
  2. $110,000
  3. $120,000
  4. $132,000
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215. A project requiring a $1,000 investment today and yielding $8,800 next year has an internal rate of return (IRR) of
  1. 0.78 percent
  2. 7.8 percent
  3. 78 percent
  4. 780 percent
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