The Non-Market Rate fiNancing Impact on the APV Is

question 18

Multiple Choice

The non-market rate financing impact on the APV is:

• A)calculated by Tc B because the tax shield depends only on the amount of financing.
• B)calculated by subtracting the all equity NPV from the FTE NPV.
• C)irrelevant because it is always less than the market financing rate.
• D)calculated by the NPV of the loan using both debt rates.
• E)None of the above.

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Definitions:

Price-Elasticity Coefficient

A measure indicating the responsiveness of the quantity demanded or supplied of a good to a change in its price.

Equal To Zero

A state or condition where a value, quantity, or balance is zero.

Price-Elasticity Coefficient

A measure showing the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price.

Midpoint Formula

A method used to calculate the elasticity of demand or supply by dividing the percentage change in quantity demanded or supplied by the percentage change in price, using the average of the initial and final values.