According to sub-category of equity valuation known as "Dividend Growth Models': current stock price (Po) may be approximated by present value of all future dividends, which are assumed to be growing a constant per-period rate (g). True False 1. 2. Stock valuation PV models based on assumptions of constantly-growing quarterly/yearly dividends are often quite inaccurate. Real-world complications and eventualities such as dividend pattern in a capitalist economic system. However, the model remains important because it is often rewritten algebraically to estimate firm a. fluctuating PE ratios; after-tax cost of debt b. business cycles; required returns to equityholders c. corporate taxes; long-run earnings growth rates d. competition; dividends per share e. none of the above call into question the possibility of sucha cash flow 3. Sunk costs are a real-world example of a(n) which should not be included into the calculations of a capital budgeting analysis. 4. An firm investment project's average net income divided by its average book value is a. payback period b. average accounting return c. net present value d. discounted payback e. internal rate of return Which of the following is NOT a criticism of the Discounted Payback decision rule? a. the approach ignores the time value of money b. discounted payback suffers from 'myopia", i.e., a short-term project focus bias c. risk differences between projects cannot be considered d. establishment of the cutoff point are often arbitrary- without any economic basis e. all of the above are actual criticisms 5. 6. Focusing upon project cash flows (versus accounting profit)- and adjustment of CF's according to their timing via discount rates- net present value (NPV) is the decision rule most consistent with shareholder wealth maximization.. True False