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Question
The problem with the residual dividend policy ratio is:A) investors might come to expect a specified amount.
B) the dollar amount of the dividend fluctuates from year to year.
C) management is reluctant to cut the dividend even if there are low profits in a year.
D) all of the above are possible problems.
Answer
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Related questions
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A) The net present value.
B) The internal rate of return.
C) The profitability index.
D) The modified internal rate of return.
Q:
Initial Outlay Cash Flow in Period
1 2 3 4
-$4,000 $1,546.17 $1,546.17 $1,546.17 $1,546.17
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Year 2 = $3,000
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The equivalent annual cost method is most appropriate in which of the following situations? In each case, assume that several mutually exclusive options are available.
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B) Adding another store to a chain of retail stores
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WSU Inc. has various options for replacing a piece of manufacturing equipment. The present value of costs for option Ell is $84,000. Option Ell has a useful life of 5 years; annual operating costs were discounted at 9%. What is the equivalent annual cost?
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The size of capital investments and the difficulty in reversing them once they are made make capital-budgeting decisions very important to the firm.
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Competitive market forces make it imperative for a firm to have a systematic strategy for generating capital-budgeting projects.
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Good capital investment opportunities are most likely to exist when:
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Q:
P/E ratios found in published sources or on the internet are always computed by dividing the next period's expected earnings into the current price of the stock.
Q:
Apple stock is now selling for $315.32 per share. The P/E ratio based on current earnings is 23.72 and the P/E ratio based on expected earnings is 17.48. The expected growth rate in Apples earnings must be:
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B) 36%.
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D) 5.5%.
Q:
If the ROE on a new investment is less than the firm's required rate of return:
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B) the investment leaves the firm's value unchanged.
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D) the investment reduces the firm's value.
Q:
McDonald's stock currently sells for $77.50. It's expected earnings per share are $4.50. The average P/E ratio for the industry is 23.3. If investors expected the same growth rate and risk for McDonald's as for an average firm in the same industry, it's stock price would:
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B) 14.
C) 2.14.
D) 30.
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Which of the following factors will influence a firm's P/E ratio?
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B) Firm investment opportunities
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D) All of the above
Q:
You are considering the purchase of AMDEX Company stock. You anticipate that the company will pay dividends of $2.00 per share next year and $2.25 per share the following year. You believe that you can sell the stock for $17.50 per share two years from now. If your required rate of return is 12%, what is the maximum price that you would pay for a share of AMDEX Company stock?
Q:
Draper Company's common stock paid a dividend last year of $3.70. You believe that the long-term growth in the dividends of the firm will be 8% per year. If your required return for Draper is 14%, how much are you willing to pay for the stock?
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Kelly owns 10,000 shares in McCormick Spices, which currently has 500,000 shares outstanding. The stock sells for $86 on the open market. McCormick's management has decided on a 2-1 split.
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Q:
A stock dividend increases a firm's retained earnings.
Q:
By virtue of its nature, dividend policy is inherently a wealth-creating activity for the firm's owners.
Q:
Dividend payout ratios are generally much lower for small or newly established firms than for large, publicly owned firms.
Q:
The dividend declaration date is the date at which the stock transfer books are to be closed for determining the investor to receive the next dividend payment.
Q:
The ________ designates the date on which the stock transfer books are closed in regard to a dividend payment.
A) declaration date
B) ex-dividend date
C) date of record
D) payment date
Q:
Five years ago, Mr. Martinez purchased 1000 shares of JPM stock at $50 per share. If Mr. Martinez ' tax rate is 25% would he prefer that the company pay a $5.00 per share dividend or offer to repurchase 100 shares at $50 per share?
A) Pay the dividend because he would have no transaction costs.
B) It would make no difference because he would receive $5,000 either way.
C) Repurchase the stock because he would owe no taxes.
D) It would make no difference because the tax rate on dividends is the same as the tax rate on capital gains.
Q:
For accounting purposes, a stock split has been defined as a stock dividend exceeding:
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B) 35%.
C) 45%.
D) 55%.
Q:
A stock dividend will cause changes in the dollar value of which of the below capital accounts?
A) Common stock
B) Additional paid-in capital
C) Retained earnings
D) All of the above
Q:
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A) There is not enough information to know.
B) EPS will increase by 10%.
C) EPS will not be affected by the stock dividend.
D) EPS will decrease by 10%.