Exam 31: Financial Management in Not-For-Profit Businesses

The net present social value model formally recognizes that not-for-profit firms must consider the social value along with the financial value of proposed new projects.

Which of the following statements about municipal bond financing is most correct?

Which of the following statements about a not-for-profit firm's ownership is most correct?

Which of the following statements about a not-for-profit firm's cost of capital estimate is most correct?

Which of the following statements about project risk analysis in not-for-profit firms is incorrect?

Which of the following statements about a not-for-profit firm's sources of capital is most correct?

The primary goal of investor-owned firms is shareholder wealth maximization,while the primary goal of not-for-profit firms is typically stated in terms of some mission; for example,to provide health care services to the communities served.

Not-for-profit firms have fund capital in place of equity capital.Since fund capital does not have to provide a return to stockholders,the appropriate cost of fund capital in a cost of capital estimate is zero.

Since not-for-profit firms do not pay taxes,they receive no tax benefits whatsoever from using debt financing.

Which of the following statements about a not-for-profit firm's fund capital is most correct?