Inversely related to the cost of equity

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Reference no: EM131919696

1. Financial risk is which of the fallowing:

Inversely related to the cost of equity.

Dependent upon a firm’s capital structure.

The risk inherent in a firm’s operations.

A type of unsystematic risk.

Irrelevant to the value of a firm.

2. Which statement is CORRECT?

a) Equivalent Annual Annuity is a method used to compare two repeatable projects with different lives.

b) The risk adjusted discount rate is the rate at which two projects have the same NPV and is found by calculating the IRR of the difference in the cash flows of two projects.

c) The crossover rate is the rate at which a project’s cash flows are assumed to be reinvested

d) Scenario Analysis provides a distribution of all possible outcomes for a project.

Reference no: EM131919696

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