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Question 1
Which of the following statements represents a key difference between Net Present Value (NPV) and Internal Rate of Return (IRR)?
Correct Answer:
NPV assumes reinvestment at the cost of capital, whereas IRR assumes reinvestment at the project's internal rate of return.
Question 2
A company's equity beta is 1.2, the risk-free rate is 4%, and the market risk premium is 6%. Using the Capital Asset Pricing Model (CAPM), what is the company's cost of equity?
Correct Answer:
11.2%
Question 3
An investment is expected to pay £5,000 annually in perpetuity. If the discount rate is 8%, what is the present value of this perpetuity?
Correct Answer:
£62,500
Question 4
A project requires an initial outlay of £150,000 and is expected to generate constant annual cash inflows of £40,000. What is the payback period for this project?
Correct Answer:
3.75 years
Question 5
A company has a capital structure of 60% equity and 40% debt. The cost of equity is 12%, the pre-tax cost of debt is 7%, and the corporate tax rate is 20%. What is the Weighted Average Cost of Capital (WACC)?
Correct Answer:
9.44%
Question 1
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About this Exam

Prepare with the CISI Corporate Finance Technical Foundations Practice Questions - CISI Corporate Finance Technical Foundations Exam practice quiz. This question bank includes 100 questions covering company, rate, value, million, and equity. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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CISI Corporate Finance Technical Foundations Practice Questions - CISI Corporate Finance Technical Foundations Exam

This practice set contains 100 questions from the matching question bank and focuses on company, rate, value, million, and equity. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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