1 consider the following cash flow in actual dollars the, Ask an Expert

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1. "Consider the following cash flow in actual dollars. The inflation rate is 4.6%. The inflation-free interest rate is 10.6%. What is the net present worth of the cash flow? The cash flow in actual dollars for year 0 through 3 is -$36, $27, $27, and $44 respectively.

2. Which of the following statements is CORRECT?

a. Funds acquired by the firm through retaining earnings have no cost because there are no dividend or interest payments associated with them.

b. The firm’s cost of external equity raised by issuing new stock is the same as the required rate of return on the firm’s retained earnings.

c. A firm’s cost of equity is highly dependent upon the risk level of the firm.

d. A firm’s cost of equity is inversely related to changes in the firm’s tax rate.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92744242

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