6. Which of the following statement on capital budgeting is correct? a) We should focus on the incremental profits, instead of incremental cash flows of the new project. b) Depreciation tax shield adds value to a given project. c) Other things being equal, applying a straight-line depreciation schedule give a higher depreciation tax shield than applying the MACRS (Modified Accelerated Cost Recovery System) schedule. d) All of the above. 7. Which of the following statement on stock valuation is incorrect? a) In dividend discount model, the stock value is the present value of all future dividends. b) We may use the dividend discount model to value all firms. c) Enterprise value is the sum of equity and debt minus cash. d) We may use price-earnings ratio to compute the value to comparable firms. 8. You are standing at year 0 . You are expected to receive a dividend of $2.10 at the end of years 1 and 2 , you expect to receive a dividend of $2 at the end of year 3 and a stock price of $15. If cost of capital is 20%, how much would you be willing to pay? a) 13.53 b) 13.05 c) 14.05 d) 15.05 iJ 9. Which of the following statement on investment rules is incorrect? a) A project can have multiple IRRs. b) IRR and NPV methods can lead to inconsistent conclusions. c) When a firm has limited financial resourceswhich means it cannot invest all independent positive NPV projects-NPV is the best decision rule. d) None of the above