Chap 14 Flashcards
1
Q
Cost of Equity
A
The return that equity investor requier on their investment in the firm
2
Q
Retention Ratio
A
Retained earnings / net income
3
Q
Return on Equity
A
Net income after interest and tax / Average common shareholders’ equity
4
Q
Cost of Debt
A
return that lenders requier on firm’s debt
5
Q
Weighted Average Cost of Capital
A
Weighted average cost of debt and equity
6
Q
Economic Value added
A
performance measure based on the WACC
7
Q
Pure play approach
A
Use of the WACC that is unic to a particular project
8
Q
Flotation cost
A
Cost associated with issuance of new securities
