“� � � Question 1 � � � The IRR � � � � � � “� � � Question 2 � � � The process of allocating funds among competing investment opportunities is referred to as: “� � � Question 3 � � � The corporate planning tool that develops project plans that fit well with the firm’s plans is often referred to by the following acronym: � � “� � � Question 4 � � � An examination of a firm’s opportunities, strengths, threats and weaknesses is often referred to by the following acronym: � � � � “� � � Question 5 � � � The stage in the capital budgeting process that involves applying the appropriate capital budgeting techniques to help make a final accept or reject decision is called the _____________ stage. � � “� � � Question 6 � � � Capital budgeting is “� � � Question 7 � � � When considering the time value of money, which of the following four methods of project evaluation would appear to be the least satisfactory? � � “� � � Question 8 � � � In calculation of a payback period, what use is made of cash flows occurring after the end of the payback period? � � “� � � Question 9 � � � The ratio between the present value of a project’s cash inflows and the present value of its initial investment is called the: “� � � Question 10 � � The capital-budgeting process starts with which one of the following stages: � � � � “� � � Question 11 � � When retained earnings are used up and new common stock is issued, we know that the cost of: � � “� � � Question 12 � � As a general rule, the capital structure that maximizes stock price also: � � “� � � Question 13 � � Smith Company has a degree of operating leverage of 5, while Johnson Company has a degree of operating leverage of 2. Supplied with this knowledge, pick the response below that is most typical of Johnson Company. � � “� � � Question 14 � � Corporate debt as a percentage of GDP grew from around ______ in 1970 to nearly ______ in 2007. � � � � � � � � � “� � � Question 15 � � Which of the following is not used in the weighted average cost of capital equation? � � “� � � Question 16 � � Which of the following costs must be adjusted to an after-tax cost? � � � � “� � � Question 17 � � The firm’s target capital structure is consistent with which of the following? � � � � � � “� � � Question 18 � � A decrease in the debt ratio will normally have no effect on: � � � � � � “� � � Question 19 � � A firm’s business risk is measured by the variability in which one of the following over time: � � “� � � Question 20 � � The cost of debt:
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