Question1: A corporation borrows 1 million dollars at ten percent annual rate of interest. The firm has 40 percent tax rate. The yearly, after tax cost of this debt is
[A] $100,000
[B] $166,667
[C] $40,000
[D] $60,000
Question2: The purpose of the stock split is to
[A] Reduce the price of the stock
[B] Reduce trading activity
[C] Issue additional shares
[D] Increase the dividend
Question3: The repurchase of stock _____________ the earnings per share and _______________ the market price of stock
[A] Increase, decrease
[B] Decrease, increase
[C] Increase, increase
[D] Decrease, decrease
Question 4: The cost of each type of capital depends on the
[A] Business risk of the firm
[B] Financial risk of the firm
[C] risk-free cost of that type of funds.
[D] all of the above