Question

1) The net present value varies depending on the timing of an investment's cash flows.

(True / False)

2) Semi-strong form efficient markets do not include private information in asset prices.

(True / False)

3) The weighted average cost of capital includes the cost of equity and its aftertax cost of debt.

(True / False)

Answer 1

1) True

The net present value is calculated by dividing the cash flows with the discount rates. So if you receive a cash flow in the early stage of the project, it will be discounted for lower number of yeats as compared to the cash flow received in later years.

2) True

Only strong form efficient markets include private information in asset prices.

3) True

Weighted average cost of capital is calculated using the optimal capital structures and multiplying them by the cost of equity and the after tax cost of debt.

Let me know in the comment section in case of any doubt.