Billingsley United declared a $0.20 a share dividend on Thursday, March 16

QUESTION

9. Billingsley United declared a $0.20 a
share dividend on Thursday, March 16. The dividend will be paid on Monday,
April 30 to shareholders of record on Tuesday, April 15. Which one of the
following is the ex-dividend date?
Thursday, April 26
Monday, April 14
Friday, April 27
Friday, April 11
Tuesday, March 14

10. After _______________, a business firm
ceases to exist as a going concern.
divestiture
share repurchase
reorganization
capital restructuring
liquidation

11. A firm’s overall cost of equity is:
I. generally higher than the firm’s WACC for
a levered firm.
II. affected by changes in the market risk
premium.
III. not dependent upon the growth rate and
risk level of the firm.
IV. generally higher than the firm’s aftertax
cost of debt.
V. inversely related to changes in the firm’s
tax rate.

I, II, IV and V only
I, III and V only
II, III, IV and V only
I, II, III, IV and V only
I, II and IV only

12. Automatic dividend reinvestment plans:
I. allow stockholders reinvest part or all of
the dividends to which they are entitled.
II. sometimes grant shareholders the
privilege of purchasing additional shares at a discounted price.
III. help shareholders create their own
homemade dividend policies.
IV. help make corporate dividend policies
irrelevant to individual stockholders.
I, II, III and IV
II, III and IV only
II only
III only
I, II and IV only

13. The _______________ is the average of a
firm’s cost of equity and aftertax cost of debt that is weighted based on the
firm’s capital structure.
structured cost of capital
subjective cost of capital
reward to risk ratio
weighted average cost of capital
weighted capital gains rate

14. The dividend growth model:
is not as reliable as the estimated rate of
growth.
does not consider the risk that future
dividends may vary from their estimated values.
uses standard deviation to measure the systematic risk of a firm.
applies even when a firm does not pay
dividends.
can only be used if historical dividend
information is available.

15. Financial distress costs should include
I. direct bankruptcy costs
II. indirect bankruptcy costs
III. direct costs related to being
financially distressed, but not bankrupt
IV. indirect costs related to being
financially distressed, but not bankrupt
I and II only
III and IV only
I only
I, II, III, and IV
III only

16. Which one of the following statements is
correct?
Interest expense should always be included as
a cash outflow when analyzing a project.
The depreciation tax shield creates a cash
inflow for a project.
The opportunity cost of a company-owned
building that is going to be used in a new project should be included as a cash
inflow to the project.
Project analysis should only include the cash
flows that affect the income statement.
A project must create a positive operating
cash flow without affecting sales.

17.
Yesterday, O.L. Jones & Co. paid a $0.58
quarterly cash per share to its shareholders. This payment was made in the
normal course of business out of the firm’s net income. Thus, this cash payment
is referred to as a ________________________.
regular cash dividend
extra cash dividend
liquidating dividend
special dividend
repurchase

18. Which one of the following is an example
of a sunk cost?
$2,500 of lost sales due to an item was out
of stock
none of the given costs is a suck cost.
$10,000 project that must be given up if
a similar project is accepted.
$2,800 increase in comic book sales if a
store commences selling puzzles
$3,500 reduction in a store’s current novel
sales if it starts selling magazines.

19. Which of the following statements related
to cash dividends are correct?
I. Extra cash dividends can be repeated in
the future but there will be no guarantee that it will repeat.
II. A dividend is never a liability until it
has been declared.
III. If a firm has paid regular quarterly
dividends for at least five consecutive years it is legally obligated to
continue doing so.
IV. Regular cash dividends reduce paid-in
capital.
V. The dividend yield expresses the annual
dividend as a percentage of current stock price.

I, II and V only
II, IV and V only
I, II and IV only
I, II, III, IV and V
I, II, III and IV only

20. Pro forma financial statements for a
proposed project should:
I. be compiled on an aggregate basis.
II. exclude all the incremental cash flows
related to the project.
III. generally exclude interest expense.
IV. include all project-related fixed asset
acquisitions and disposals.
II, III, and IV only
I, II, and IV only
I, II, III, and IV
III and IV only
I and II only

21. Which of the following are a project’s
cash inflows? Ignore any tax effects.
I. increase in accounts payable
II. increase in inventory
III. decrease in accounts receivable
IV. depreciation expense based on MACRS
V. equipment acquisition

I and II only
I, III, IV and V only
I, II and III only
I and III only
I, IV and V only

22. If you ignore taxes and costs, a stock
repurchase will:
I. increase the total assets of a firm.
II. decrease the earnings per share.
III. reduce the total debt of a firm.
IV. reduce the total equity of a firm.
II, III, and IV only
III only
II and IV only
IV only
I, III, and IV only

ANSWER

CLICK HERE TO GET AN EXPERT SOLUTION TO THE QUESTION