Question
21. Which one of the following statements concerning common or preferred shares is correct? Select one: a. The constant dividend growth model assumes that future
21.
Which one of the following statements concerning common or preferred shares is correct?
Select one:
a. The constant dividend growth model assumes that future stock price grows at the same rate as its future dividends
b. The constant dividend growth rate model is not sensitive to dividend growth rate
c. The value of a common share is based on the present value of its selling price at a future date
d. Dividends are a business expense and are tax deductible
e. One approach to estimating the value of common share is to use the present value of a growing annuity formula
25.
You are reviewing a proposal to purchase new equipment. The upfront cost of equipment is $215,000. If purchased, annual cash flows would increase by $86,000 for the first 3 years and $74,000 a year for years 4 and 5. At the end of five years, the equipment will be sold for $14,000, increasing the annual cash flow for year five to $88,000. If the companys weighted average cost of capital is 14.4%, calculate the net present value for the equipment purchase.
Select one:
a. $71,327
b. $71,443
c. $71,359
d. $71,489
e. $71,576
answer asap!!!!
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