1. Which one of the following will decrease the current value of a constant dividend growth stock? A. Decrease in the dividend growth rate B. Decrease in the required return C. Decrease in the market rate of return D. Increase in the expected dividend for next year E. All of the above. The common stock of Tasty Treats is valued at $10.80 a share. The company increases its dividend by 8 percent annually and it just paid a dividend of $0.20 per share. What is the total rate of return on this stock? A. 8.00 percent B. 9.12 percent C. 9.40 percent D. 9.85 percent E. 10.00 percent

. Which of the following is false? A. Common stock has priority over preferred stock for dividends. B. Shareholders of common stock control the corporation through the right to elect the board of directors. C. Shareholders of preferred stock generally have no voting privileges. D. Preferred stock dividends are taxable.

E. All of the above. F. None of the above.

The required return on a stock is the sum of the: A. capital gain yield and dividend growth rate. B. capital gain yield and current yield. C. dividend yield and current yield. D. constant growth rate and supernormal growth rate. E. dividend yield and capital gain yield.

Which one of the following indicates that a project fails to create value for its owners? A. Profitability index greater than 1.0 B. Payback period greater than the requirement C. Negative net present value D. Positive average rate of return

E. Positive internal rates of return F. Multiple internal rates of return The payback period is the length of time it takes an investment to generate sufficient cash flows to enable the project to: A. produce a positive annual cash flow. B. produce a positive cash flow from assets. C. recover its initial investment. D. offset its total operating costs. E. recover its opportunity cost.

Both Projects A and B are acceptable as independent projects. However, in this case the selection of either one of these projects eliminates the option of selecting the other project. Which one of the following best describes the correct decision rule between Project A and Project B in this case? A. Select both projects B. Select neither project C. Multiple choice D. Select the positive net present value project E. Select the greater net present value project

F. None of the above

Which one of the following is generally considered to be the best form of analysis if you have to select a single method to analyze a variety of investment opportunities? A. Payback B. Profitability index C. Accounting rate of return D. Internal rate of return E. Net present value

F. Incremental analysis

The internal rate of return is unreliable as an indicator of whether or not an investment should be accepted given which one of the following? A. One of the time periods within the project period has a cash flow equal to zero B. The initial cash flow is negative C. The investment has cash inflows that occur after the required payback period D. A and B

E. All of the above F. None of the above

Weston Steel purchased a new coal furnace 16 months ago at a cost of $2.2 million. Last year, the government changed the emission requirements and this furnace cannot meet those standards. Thus, Weston must modify and upgrade the furnace. For the upgrading project, the furnace is best described as which type of cost? A. Erosion B. Book C. Sunk D. Market E. Opportunity

F. Variable