1 Which one of the following generally pays a fixed dividend, receives first pricenity in dividend payment, and maintains the right to a dividend payment, even if that payment is deferred? a. Cumulative common b. Noncumulative common c. Noncumulative preferred d. Cumulative preferred e. Senior common 2 Compound interest: allows for the reinvestment of interest payments b. does not allow for the reinvestment of interest paymernts c. is the same as simple interest d. provides a value that is less than simple interest. e. Both A and D The time value of money concept can be defined as: 3. a. the relationship between the supply and demand of money b. the relationship between money spent versus money received c. the relationship between a dollar to be received in the future and a dollar today d. the relationship between interest rate stated and amount paid e. None of the above. Discounting cash flows involves a. discounting only those cash flows that occur at least 10 years in the future b. estimating only the cash flows that occur in the first 4 years of a project multiplying expected future cast flows by the cost of capital d. discounting all expected fulare cash Bows to teflect the time valse of money e. taking the cosh discount offered on trads roerchandise c. An annuity a is a debt instrument that pays no interst b. is a stream of payments that varies with cunent mt iot c is a level stream of equal payments through time d. has no value e. None of the above A project has the following cash flows. What is the payback period? Cash Flow $31,000 15,600 7,100 8,700 9,100 Year 1 a. 2.954 years b. 2.943 years c. 2.931 years d. 2.920 years 2.897 years f. 2.885 years g. 2.874 years . 1 Healthy Foods just paid its annual dividend of $2.25 a share. The firm recently announced that all future dividends will be increased by 5.12 percent annually What is one share of this stock worth to you if you require an 11 peroent rate of return? a $40.22 b. $49.16 c. $58.10 d. $67.04 e. $75.98 f$84.92 & $93,86 36 much are you willing to pay for one share if you require a 9 percent rate of return? T he Waffle House pays a constant annual dividend of $11.90 per share. How a $137.78 b. $135.56 $134.44 c. d. $132.22 $130.00 t $125.56 &$123.33 What is the net present value of the following cash flows if the relevant discount rate is 6 percent? 37 Cash Flow $105,500 46,900 62,300 22,000 18,300 14,000 Year 0 1 2 3 4 $677.37 b. $1,177.37 $1,677.37 d. $2,177.37 e. $3,177.37 E$3,677.37 & $5,177.37 c. 11 i A mjt hs she dlowig h bows Whet e Cash Elenw 343,000 1.260 17,00 16,000 13.560 Yoar 4 12.98 peroent 13.32 pereet 13.58 percent 13.85 percent 14.02 percent 14.11 percent 14.28 percent Jackson Corpoation just paid a dividend of De $3.68. Analysts expect the company's dividond to gow hy 15 percent for the nest three years, and at a constant rate of 6 percent thereafter, If the required return on this stock is 12 percent, what is the best estimate of the stock's current market value? 39 $86.70 $83.14 S82.02 $81.80 $79.79 $78.23 $77.34 b. d. c. f