5. If the price of Google's preferred stock is $30 and the dividend is $4 a year, then the cost of preferred stock is? A) 13.333% B) 7.5% C) 34% D) 26% 6. The shortcoming(s) of the average accounting return (AAR) method is (are) A) the use of net income instead of cash flows. B) the pattern of income flows has no impact on the AAR number. C) there is no clear-cut decision rule. D) All of the above are shortcomings. E) None of the above are shortcomings. 7.If the cash flows for a project change signs more than once, then the IRR criterion may fail to identify an acceptable project because of the problem. A) multiple rate of return B) net income C) mutually exclusive project D) independent investment project E) return on equity 8. What is the Payback Period for the following cash flows (CFFA): today, - $6,000; end of year one, + $3,000; end of year two, + $1,300; end of year three, + $5,000. A) 3 years B) 2 years C) 2.34 years D) 2.9 years E) 4 years 9. A risk premium is defined as A) the additional return over and above the risk-free rate resulting from bearing risk. B) the total market rate of return for the financial asset that an investor pays C) the risk-free rate the market return minus the S&P 500 E) the last Kentucky Derby Winner 10. What is the profitable index (PI) if you invest $10,000 today and the sum of the time value of money future Cash Flows from Assets (CFFA) is $30,500? Should you accept or reject the project? A) 0.328 / Reject B) 0.328 / Accept C) 3.05 / Reject D) 3.05 / Accept E) $30,500 / Accept