The APV Method Includes All Equity NPV of a Project

question 58

Multiple Choice

The APV method includes all equity NPV of a project and the NPV of financing effects. The financing effects are:

• A) Tax subsidy of dividends, cost of issuing new securities, subsidy of financial distress and cost of debt financing
• B) Cost of issuing new securities, cost of financial distress, tax subsidy of debt and other subsidies
• C) Cost of issuing new securities, cost of financial distress, tax subsidy of dividends and cost of debt financing
• D) Subsidy of financial distress, tax subsidy of debt, cost of other debt financing and cost of issuing new securities

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Definitions:

Drawee

The party directed by a draft or check to pay a certain amount of money, typically a bank.

Payee

The individual or entity to whom money is paid or owes to be paid.

Negotiable Instrument

A negotiable instrument is a written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the characteristic of being transferable by endorsement or delivery.

Validity

Validity refers to the state of being legally sound, effective, or binding; it is the quality of conforming to law or fact.