1. The choice of the firm's investment in new assets is considered: A. a capital budgeting decision. B. a capital structure decision. C. a financing decision. D. a working capital decision. E. none of the above. 2. Welles Ltd wants to sell preference shares at $7 per share. A very similar issue of preference shares having similar risk characteristics already on issue has a price of $3 per share and offers a dividend of $0.15 every year. What dividend will Welles Ltd have to offer if the preference shares are going to sell? A. $0.05 B. $0.06 C. $0.20 D. $0.35 E. $1.05 3. The price of a share: A. equals the present value of all future cash flows associated with the share. B. is a function of the size, timing and risk of the future cash flows associated with the share. C. will decrease if the riskiness of the share's future cash flows increases. D. (A) and (B) only. E. (A), (B), and (C). 4. Different discounted cash flow evaluation methods may provide conflicting rankings of investment projects when: A. the size of the investment outlays differ. B. the projects have unequal lives. C. the timings of the cash flows differ. D. (A) and (B) only. E. (A), (B), and (C)