6. Which of the following factors would not tend to be associated with a company having a low dividend payout ratio? a. Low growth prospects. 6. High tax rates on dividends. c. High flotation costs on new equity issues. 7. Gamma Corporation is a manufacturer of inflatable furniture. Which of the following scenarios best reflects a stable dividend policy for Gamma? a. Maintaining a constant dividend payout ratio of 40-50%. 6. Maintaining the dividend at $1.00 a share for several years given no change in Gamma's long-term prospects. c. Increasing the dividend 5% a year over several years to reflect the two years in which Gamma recognized mark-to-market gains on derivative positions. 8. Investors may prefer companies that repurchase their shares instead of paying a cash dividend when: a capital gains are taxed at lower rates than dividends. b. capital gains are taxed at the same rate as dividends. c. the company needs more equity to finance capital expenditures. 9. A company increasing its credit terms for customers from 1/10, net 30 to 1/10, net 60 will most likely experience: a. an increase in cash on hand. b. a lower level of uncollectible accounts. c. an increase in the average collection period. 10. Suppose a company uses trade credit with the terms of 2/10, net 50. If the company pays their account on the 50th day, the effective borrowing cost of skipping the discount on day 10 is closest to a 14.9% b. 15.0%. c. 20.2% 11. Common-size analysis is used in financial analysis to: a evaluate changes in a company's operating cycle over time. b. compare companies of different sizes or to compare a company with itself over time. C. restate each element in a company's financial statement as a proportion of the similar account for another company in the same industry