Because a firm’s performance measures reflect past performance, these measures can NOT be used to assist in forecasting future financial statements. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The ________ method of capital budgeting provides an answer in dollar terms whereas the ________ method provides answers in percentage terms. A) IRR; payback B) NPV; payback C) MIRR; IRR D) NPV; IRR ANSWER D
Date: September 19th, 2020
________ on preferred shares are paid ________ taxes and ________ common share dividends. A) Interest payments; before; after B) Dividends; before; after C) Dividends; after; before D) Interest payments; after; after ANSWER C
Date: September 19th, 2020
Accounts payable results from transactions in which merchandise is purchased but no formal note is signed to show the purchaser’s liability to the seller. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Regularly paying a fixed or increasing dividend eliminates uncertainty about the frequency and magnitude of dividends. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following is considered an advantage of the net present value method of capital budgeting over the payback method? A) The NPV considers all cash flows. B) The NPV uses the firm’s required rate of return to discount cash flows. C) The NPV method considers opportunity costs in its calculations. D) All of […]
Date: September 19th, 2020
Diamond Electronics Inc. has a current price of $18.45 per share for its preferred shares that pay an annual dividend of $0.96. What is the current return on the firm’s preferred shares? A) 5.20% B) 19.22% C) 8.74% D) There is not enough information to answer this question. ANSWER A Explanation: A) r […]
Date: September 19th, 2020
Spontaneous unsecured financing has a specific interest cost associated with it that can be at a fixed or floating rate. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
By calling the additional dividend an extra dividend, a firm avoids setting expectations that the dividend increase will be permanent. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Use the information in Table 4.1 to determine the 2013 dividend payout ratio for Bacon Signs. A) This question cannot be answered from the information provided. B) $250/$7418 = 0.03 C) $463/$713 = 0.65 D) $250/$713 = 0.35 ANSWER D Explanation: D) DPO Ratio = (Div)/NI = $250/$713 = 0.35
Date: September 19th, 2020
