In the constant growth dividend model for determining the required return on equity, the expected returns are determined by the expected dividend yield as well as the expected growth in dividends over time. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Profitability measures such as the EBIT margin and ROIC focus on the ability of a firm to earn a sufficient operating profit with reasonable expenses. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Stock dividends are ________. A) taxable at a higher level than dividend taxes B) taxable at a lower level than dividend taxes C) non taxable D) are taxable only to the shareholders ANSWER C
Date: September 19th, 2020
The payback method of capital budgeting may be applied to either annuity cash flows or uneven cash flows. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A firm is offered credit terms of 2/10 net 45 by most of its suppliers but frequently does not have the cash available to take the discount. The firm has a credit line available at a local bank at an interest rate of 12 percent. The firm should ________. A) give up the cash discount, […]
Date: September 19th, 2020
The capital budgeting techniques presented by the author in chapter 8 are quantitative assessment tools to determine whether a firm should proceed with an investment in a project Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The cost of equity is usually estimated either by the dividend model or the capital asset pricing model (CAPM). Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following is NOT a reason why cash flow may not equal net income? A) Amortization is added in when calculating income. B) Changes in inventory will change cash flows but not income. C) Capital expenditures are not recorded on the income statement. D) Depreciation is deducted when calculating net income. […]
Date: September 19th, 2020
A firm is offered credit terms of 1/10 net 45 EOM by a major supplier. The firm has determined that it can stretch the credit period (net period only) by 25 days without damaging its credit standing with the supplier. Assuming the firm needs short-term financing and can borrow from the bank on a line […]
Date: September 19th, 2020
A firm purchased goods on January 27 with a purchase price of $1,000 and credit terms of 2/10 net 30 EOM. The firm paid for these goods on February 9. The firm must pay ________ for the goods. A) $1,000 B) $980 C) $800 D) $900 ANSWER B
Date: September 19th, 2020
