Determining how a firm should raise money to fund its long-term investments is referred to as capital structure decisions. Select one: True False
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7 Determining how a firm should raise money to fund its long-term investments is referred to as capital structure decisions.
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- 22. A qualitative factor (as opposed to a quantitative factor) that managment should consider when evaluating alternative capital investments would be Group of answer choices estimated costs The corporate strategy projected net cash flows economic returns and IRR__________ is the percentage of various capital components a firm plans to use to fund investments.Capital investment decisions often involve all of the following except______. A. qualitative factors or considerations B. short periods of time C. large amounts of money D. risk
- Defining capital investment terms Fill in each statement with the appropriate capital investment analysis method: Payback, ARR, NPV, or IRR. Some statements may have more than one answer. __________ is(are) more appropriate for long-term investments. __________ highlights risky investments. ____________ shows the effect of the investment on the company’s accrual-based income. ___________ is the interest rate that makes the NPV of an investment equal to zero. __________ requires management to identify the discount rate when used. _________ provides management with information on how fast the cash invested will be recouped ___________ is the rate of return, using discounted cash flows, a company can expect to earn by investing in the asset. __________ does not consider the asset’s profitability __________ uses accrual accounting rather than net cash inflows in its computation.7. A. which of the following working capital financing policies subjects the firm to a greater risk? i. Financing permanent current assets with short-term debt ii. Financing fluctuating current assets with long-term debt B. Which policy will produce the higher expected profitability?1- Discuss the concept of an optimal capital structure? 2- Distinguish between business and financial risk?
- Deciding a firm's capital structure can be understood as: a. a capital budgeting decision b. a capital structure decision c. a primary market decision d. an asset efficiency decisionn\Deciding a firm's capital structure can be understood as: a. a capital budgeting decision b. a capital structure decision c. a primary market decision d. an asset efficiency decisionExplain what the weighted average cost of capital for a firm is and why is it often used as a discount rate to evaluate capital projects.
- “By applying capital to investments with long-term benefits, the company is attempting to produce value. This value is dependent on expected future cash flows as well as on the cost of funds.” 1. Explain this statement with regards to the role of cost of capital in financial management decisions.8.-What is the meaning of current liabilities in Working Capital Management? A) Source of financing of its current assets. B) Source of financing of its fixed assets C) Source of financing of stockholders' equity D) Source of financing of its long-term liabilities. (Choose one option)7. How are net working capital, liquidity, technical insolvency and risk related? 8. Briefly explain the essentials of sound working capital management. 9. Describe working capital management, and explain different approaches to finance working capital requirements.
