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1. When dividends are used to reduce free cash flow and limit managerial overinvestment, it is addressing an ..... problem.
7. Reducing the credit period offered to customers improves cash flow by lowering the firm’s ........ days.
9. Theoretically, all stocks in an ........ risk class are priced to offer the same expected rate of return.
10. When two machines have unequal lives but must be replaced indefinitely, the correct comparison method is the EAC approach rather than the simple ........ approach.
14. When inventory reduces, less cash is tied up in current assets, leading to higher .......... cash flow.
16. Rejecting positive-NPV projects due to existing debt obligations is called ........
18. For projects that generate positive cash flows first and negative cash flows late (similar to a borrowing pattern), such projects should be accepted only if their IRR is ...... than the opportunity cost of capital.
19. When the lessor’s tax rate is higher than the lessee’s, leasing can generate a ....... tax benefit.
20. The NPVGO captures the value added by the firm’s ability to ...... in positive-NPV projects.

2. The point at which the NPV curves of two projects meet is known as the ...... rate.
3. ........ theory is best known for explaining the effect of inflation on interest rates.
4. A capital structure with too much debt increases the probability of ......
5. Bird in the hand theory suggests that investors value a ......dividend more than uncertain future gains.
6. Opportunity cost of capital depends on the ........ of the company.
8. A lease payment that includes both depreciation tax shield benefits and financing benefits is referred to as a ...... lease.
11. If a firm has no growth opportunities, its value equals the ........ divided by the cost of equity.
12. When a firm finances its entire capital expenditure through new debt, its ...... becomes equal to net income.
13. If a bond’s coupon rate is lower than its yield to maturity, then the bond’s price will .......... over its remaining maturity.
15. Firms with strong bargaining power can reduce net working capital by delaying payments, effectively using suppliers as a source of .....
17. The relationship between short and long-term interest rates is called the ...... structure of interest rates.