the exam for finance management building shareholder value 1

There are multiple choice and some questions, like

  • Which is true about common stock and preferred stock
    • Common stock does not allow voting rights for the shareholder
    • Preferred stock and common stock represent ownership in a Company
    • For both, the investors return is tied to the performance of the Company and may result in a gain or loss
    • All of the Above
    • Both b and c

    1. A Company has debt of 40% and equity of 60%. The cost of debt is 8% and the cost of equity is 6%. The risk free rate is 2%, beta is 1.2 and the marginal tax rate is 40%. What is the Company’s cost of debt? What is the Company’s cost of equity? What is the WACC?

I also post some example that the class mentioned.

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