Finance True and False Questions

For the following, indicate whether the statement is true or false. Show the question number, and then write True or False.

Example: Q51. True

34. XYZ Corporation's cost of debt is less than its cost of equity. Therefore, XYZ should continue to issue more debt (instead of equity) in order to finance proposed capital projects.

35. The current ratio is a less strict evaluation of liquidity than the quick ratio.

36. For US corporations, the cost of debt is always less than the cost of equity.

37. A credit facility refers to the lending institution that provides corporate financing.

38. The present value of cash cannot be determined.

39. For any present value factor .abcd, the corresponding future value factor (for the same number of periods and at the same rate) would be .abcd divided by the number of years.

40. As the cost of capital increases, the NPV rule becomes more difficult to fulfill.

41. Book value is not necessarily a measure of how much an asset is worth today.

42. Annuity tables can be used when payments vary from year to year.

43. If an investment appreciates 100% in 10 years, its compound growth rate is approximately 10% per year.

44. Sarbanes Oxley legislation is relatively cost-free to implement.

45. Boeing's cash cycle is very long because of the time required to manufacture aircraft.

46. Stock dividends and bond interest payments are both legal obligations of the corporation.

47. The NPV is always a positive