A cash budget seeks to determine estimated costs and revenues in order to forecast earnings.​

One type of risk adjustment alters the firm’s cost of capital for the probability of occurrence.​

The interest paid by federal government bonds is not subject to federal income taxation.​

Dividend reinvestment plans are

Dividend reinvestment plans permit the stockholder to reinvest dividends as they are received.​

If a firm has retained earnings, it has an equal amount of cash.​

A major difference between the net present value and internal rate of return is the interest factor.​

Debt financing​ 1. increases stockholders’ return more than an equal dollar amount of preferred stock 2. increases stockholders’ return less than an equal dollar amount of preferred stock3. is less risky to the investor than preferred stock4. is more risky to the investor than preferred stock

If the cost of capital exceeds the internal rate of return, the firm should not make the investment.​

A firm’s earnings are not determined by the cash budget but are determined by the income statement.​