If a companys after-tax borrowing rate is greater than the companys earning yield when the company repurchases stock with borrowed money, going forward, the earnings per share is most likely to:
A. increase.
B. decrease.
C. Remain unchanged.
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Business risk is the combination of:
A. Operating risk and financial risk.
B. Sales risk and financial risk.
C. Operating risk and sales risk.
The NPV profiles of two Projects will intersect:
At their internal rates of return
B. If they have different discount rates.
C. At the discount rate that makes their net present values equal
Which of the following is least likely to enable a corporate board to exercise its duty by acting in the long-term interest of shareholders？
A. The board meets regularly outside the presence of management.
B. A majority of the board members are independent of firm management.
C. The board has representatives from key suppliers and important customers.
Which of the following statements about NPV and IRR is least accurate？
A. The IRR is the discount rate that equates the present value of the cash inflows with the present value of outflows.
B. For mutually exclusive projects,if the NPV method and the IRR method give conflicting rankings,the analyst should use the IRRs to select the project.
C. The NPV method assumes that cash flows will be reinvested at the cost of capital,while IRR rankings implicitly assume that cash flows are reinvested at the IRR.
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