1)T/F A firm should pay out a dividend if they cannot earn a better rate of return than the stockholder can achieve by receiving the dividend.

2)What is the yield to maturity of a 6% semiannual coupon bond that matures in 8 years if he pays 930

a) 6%

b) 3.58%

c) 7.16%

d) cannot be determined

3)What is the payback period of a 450k machine that has CF's of 175k per year?

List one problem with the payback method.