International Financial Management 2nd Edition-Test Bankchapter 16

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1、InternationalFinancialManagement,2e(Bekaert/Hodrick)Chapter16AdditionalTopicsinInternationalCapitalBudgeting16.1MultipleChoiceEasy1)ThetwoalternativeapproachestocapitalbudgetingaretheA)weightedaveragecostofcapitalandflow-to-equity.B)discountedcashflowan

2、dtheflow-to-equity.C)weightedaveragecostofcapitalandnetincome.D)discountedcashflowandnetincome.Answer:AComment:AlternativeApproachestoCapitalBudgeting,p.5902)________isthecapitalbudgetingapproachthatfindsthevalueoftheleveragedfirmbydiscountingforecastso

3、fall-equityfreecashflowswithaweightedaverageoftherequiredratesofreturntothefirm'sdebtandequity.A)Flow-to-equityB)WeightedaveragecostofcapitalC)WeightedaveragecostofcapitalandnetincomeD)DiscountedcashflowandnetincomeAnswer:BComment:TwoValuationAlternativ

4、estoANPV,p.5903)Intheflow-to-equityapproachtocapitalbudgeting,itistheafter-taxcashflowsthatareavailable________thatarediscountedattheleveredequityrequiredrateofreturn.A)tobepaidtobondholdersB)tobepaidtostockholdersC)tobeusedintheprojectD)tobepaidtogover

5、nmentagenciesthatauthorizedtheprojectAnswer:B4)WhenusingtheWACCforinternationalprojects,theweightsshouldbespecifictothe________andnottheoverallfirm.A)cashflowsB)taxrateC)internationalprojectD)terminalvalueAnswer:CComment:TheWACCApproachtoCapitalBudgetin

6、g,p.5905)AccordingtoModiglianiandMiller,intheabsenceoftaxes,thepresenceof________cannotchangethevalueofthefirm.A)financialdistressB)laborstrifeC)newequityraisesD)debtAnswer:D7Copyright©2012PearsonEducation,Inc.Comment:TheWACCApproachtoCapitalBudgeting,p

7、.5906)Becausethecashflowsfromaninternationalprojectmaybedenominatedindifferentcurrenciesfromtheheadquarters,oneoftheveryfirstdecisionsistoA)dothevaluationusingforecastsoftheforeignorhomecurrency.B)determinethesalvagevalueattheterminalstageoftheproject.C

8、)calculatethestreamoffreecashflows.D)arrangethefinancingintheforeignordomesticcurrency.Answer:AComment:ForecastingCashFlowsofForeignProjects,p.5987)Whatisthenameoftheapproachthatdiscountstheafter-taxfreecashflowstostockholdersatt