_1. Target Corp.'s 8% preferred stock with a par value of $100 and a market price of $150 will pay an annual dividend this year of $12 per share. 2. The present value of a project's cash flow minus the initial outlay equals the net present value of the project. 3. The yield to maturity is the discount rate that equates the present value of the interest and principal payments with the current market price of the bond. 4. If a bond has a market value that is higher than its par value, then the required return on the bond must be less than the bond's coupon rate. 5. The present value of a project's cash flow divided by its initial outlay equals its profitability index. 6. A preferred stock that pays an annual dividend of $10, has a par value of $100, and has a required return of 5% will be valued at $200. 7. One of the disadvantages of the payback method is that it ignores time value of money. 8. NPV is the most theoretically correct capital budgeting decision tool examined in the text. 9. One positive feature of the payback method is it emphasizes the earliest forecasted free cash flows, which are less uncertain than later cash flows and provide for the liquidity needs of the firm, 10. The profitability index is the ratio of the company's net income (or profits) to the initial outlay or cost of a capital budgeting project