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UESTION 8 A firm should continue to invest in capital budgeting projects until its marginal cost of capital is: O a equal to the internal rate of return (TRR) of the first project purchased. O b.equal to the net present value (NPV) of the last project purchased. Oc equal to the marginal return generated by the last project purchased. O d.equal to the weighted average cost of all the projects purchased O e equal to the cash generated by the last project purchased. UESTION9 The MCC schedule is either horizontal or rising, which implies that the cost of capital to a firm increases as it raises larger and larger amounts of capital. The rising section of the MCC schedule O a would be horizontal if the firm retained all of its earnings O b.occurs because the firm must, if it is to expand, be willing to take on riskier projects O c results from flotation costs associated with the sale of new common and preferred stock, along with higher debt costs, as the firm's rate of expansion increases. O d.is caused by economies of scale in financing. 00, results from a change in the debt ratio as the firm expands. UESTION 10 As per the Bond-Yield- Plus-Risk- Premium Approach, analysts estimate the cost of common equity by adding a risk premium of 3 to 5 percentage points to: O a the growth rate of the firm. O b. the risk free rate of the common equity of the firm. Oo. the return on the firm's investment in municipal bonds. O d. the interest rate on the long term debt of the firm. e, the cost ofpreferred stock of the firm. ick Save and Submit to save and submit. Click Save All Anscers to saue all answers

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