A company anticipates that its capital budget for the upcoming year will be RM 15 million. It follows a residual dividend payout policy and has a target debt:equity capital structure of 55:45. If it reports net income of RM 8.5 million, what will be its dividend payout ratio?

Select one:

a.

79.4%

b.

20.6%

c.

2.9%

d.

55.0%

The KY Ltd has been presented with an investment opportunity that will yield cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $180,000 today, and the firm's cost of capital is 12 percent. Assume cash flows occur evenly during the year, what is the payback period for this investment?

Select one:

a.

6.12 years

b.

5.71 years

c.

4.86 years

d.

5.23 years

The dividend on a common stock will be $3 in 1 year, $4.25 in 2 years, and $6.00 in 3 years. You can sell the stock for $100 in 3 years. If you require a 12% return on your investment, how much would you be willing to pay for a share of this stock today?

Select one:

a.

$81.52

b.

$85.66

c.

$75.45

d.

$77.24