1. The cost of capital for a(n) _________________ is referred to as the unlevered cost of capital.
corporate shareholder
governmental entity
private entity
all-equity firm
private individual
2. The discount rate assigned to an individual project should be based on:
I. an average of the firm's overall cost of capital for the past five years.
II. the current risk level of the overall firm.
III. the firm's interest rate for a levered firm.
IV. the actual sources of funding used for the project.
V. none of the above statements is correct.
III and V only
V only
II only
I only
III and IV only
3. Pro forma financial statements for a proposed project should:
I. be compiled on an aggregate basis.
II. include all the incremental cash flows related to the project.
III. generally exclude interest expense.
IV. exclude all project-related fixed asset acquisitions and disposals.
I, II, III, and IV
II and III only
II, III, and IV only
I and II only
I, II, and IV only