Some analysts claim that the true value of ratio analysis is not that ratios answer our questions, but rather that they help us ask better questions. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following is a major problem with the IRR method of capital budgeting? A) The IRR cutoff interest rate is arbitrary. B) The IRR is denominated as an interest rate. C) For projects with typical cash flows the IRR method agrees with the NPV accept/reject decision. D) A mix of positive and negative […]
Date: September 19th, 2020
Picarello Corporation’s next annual dividend is expected to be $4.64 per share, to be issued one year from today. The firm anticipates the growth rate in dividends will be 4% annually for the foreseeable future. If the current price is $51 per share, what is the required rate of return for the firm’s equity? A) […]
Date: September 19th, 2020
Free cash flow will increase with a decrease in: A) tax rate. B) depreciation expense. C) accruals. D) Both A and C. ANSWER A
Date: September 19th, 2020
At a firm’s quarterly dividend meeting held on December 5, the directors declared a $1.50 per share cash dividend to be paid to the holders of record on Monday, January 1. Before the dividend was declared, the firm’s accumulated retained earnings balance and cash balance were $1,280,000 and $30,000 respectively. The firm has 10,000 shares […]
Date: September 19th, 2020
For firms that are in a financial position to take a cash discount, it is advisable not to take the discount if the terms offered are 2/10 net 30. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The IRR method gives a ________ to assess the viability of a project. A) percentage return B) dollar figure C) time period D) ratio ANSWER A
Date: September 19th, 2020
Explain how to create a common size income statement and a common size balance sheet. Provide at least three reasons why analysts find the creation of common size statements to be a useful practice. What will be an ideal response? ANSWER The student should understand that each item on the income statement is […]
Date: September 19th, 2020
Spontaneous liabilities such as accounts payable and accruals represent a use of financing that arise from the normal course of business. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Which of the following is NOT a problem with the dividend model approach to estimating the cost of equity? A) Some firms do not pay dividends. B) Some firms pay dividends but do not follow a policy of constant growth. C) Sometimes it is very difficult to estimate a constant dividend growth rate for a […]
Date: September 19th, 2020
