Finance MCQs - Questions on Shares, Debt-Equity Mix, Cost of Capital, Credit Rating and Claims on Income or Assets

Information
Information text
Questions 1 to 6 refer to the following scenario:
When it started a few years ago, a firm issued shares at R2 a share, and
raised R600,000 in equity. These shares now trade at R6 a share on the open
market. The debt-equity mix is currently 10% (10% debt, 90% equity). The
firm has generated a net profit of R150,000 this year and, as a rule, pays out
50% of its profit as dividends to shareholders.
Question 1
Not yet answered
Marked out of 1.00
Question text
How many shares are there in issue?
Select one:
a. 600,000
b. 300,000
c. 100,000
Question 2
Not yet answered
Marked out of 1.00
Question text
What will the total amount of dividends be?
Select one:
a. R100,000
b. R75,000
c. R300,000
d. R15,000
e. R150,000
Question 3
Not yet answered
Marked out of 1.00
Question text
What will the EPS be?
Select one:
a. R0.25

b. R3.00
c. R0.50
d. R1.50
e. R0.75
Question 4
Not yet answered
Marked out of 1.00
Question text
What will the DPS be?
Select one:
a. R0.50
b. R0.75
c. R3.00
d. R1.50
e. R0.25
Question 5
Not yet answered
Marked out of 1.00
Question text
If the firm were to take on more debt, and double its debt-equity mix to 20%,
with no equity changes, what would the EPS be?
Select one:
a. R1.50
b. R0.50
c. R0.75
d. R3.00
e. R0.25
Question 6
Not yet answered
Marked out of 1.00
Question text
If the firm were to take on more debt, and double its debt-equity mix to 20%,
with no equity changes, what would the DPS be?
Select one:

a. R0.25
b. R0.75
c. R0.50
d. R1.50
e. R3.00
Question 7
Not yet answered
Marked out of 1.00
Question text
Questions 7 to 11 refer to the following scenario:
A firm finances 20% of its assets by means of debt, and the remainder
through equity. The interest rate on its debt is 12%, and the firm is subject to
tax at the standard corporate tax rate. The shareholders demand a return of
20% on their equity. What is the firm's debt-equity ratio?
Select one:
a. 80%
b. 25%
c. 40%
d. 66.6%
e. 20%
Question 8
Not yet answered
Marked out of 1.00
Question text
What is the firm’s cost of capital?
Select one:
a. 17.73%
b. 15.46%
c. 20%
d. 8.64%
e. 18.4%
f. 12%
Question 9
Not yet answered
Marked out of 1.00