PGT (Commerce previous year questions) (HTET) (Part – II)

Total Questions: 100

81. Firm's Cost of Capital is the average cost of:

Correct Answer: A. All sources

82. An implicit cost of increasing proportion of debt is:

Correct Answer: C. Equity shareholders would demand higher return

83. Cost of Redeemable Preference Share Capital is:

Correct Answer: C. Discount Rate that equates PV of inflows and outflows relating to capital

84. Which of the following is true?

Correct Answer: C. Retained Earnings are cheaper than External Equity

85. Cost of capital may be defined as:

Correct Answer: D. Minimum Rate of Return that the firm should earn

86. Minimum Rate of Return that a firm must earn in order to satisfy its investors, is also known as:

Correct Answer: B. Weighted Average Cost of Capital

87. Cost Capital for Equity Share Capital does not imply that:

Correct Answer: D. AC of the three above

88. In order to calculate the proportion of equity financing used by the company, the following should be used:

Correct Answer: B. Equity Share Capital plus Reserves and Surplus

89. The term capital structure denotes:

Correct Answer: B. Equity Funds, Preference Capital and Long-term Debt

90. Debt Financing is a cheaper source of finance because of:

Correct Answer: C. Tax-deductibility of Interest