Descriptions

Type of Decision

Should Lancashire Railway Company issue new bonds?

Capital structure

How much of Houston Horticulture Company's current earnings should be paid out as

Dividend policy

dividends, as opposed to being retained by the firm?

Should Edinburgh Exports Inc. purchase a new delivery truck, or should it simply repair

Capital budgeting the truck it currently owns?

Edinburgh Exports Inc. is evaluating its use of debt and equity capital. Some members of the finance team think the company would be better served by issuing new debt and using the proceeds to buy back shares of its common stock. What type of managerial decision is this?

$$ Capital budgeting

Dividend policy

Capital structure

It is useful to examine the company valuation process from both an internal and an external perspective. Actors and events that can change the firm's value can be classified by whether they affect $(1)$ the firm's cash flows $($firm factors$),(2)$ investors' perceptions of the firm's riskiness $($investor factors$),$ or $(3)$ the financial marketplace in which the company and its Investors operate $($market factors$).$

In the following table, indicate whether the factors described fall into the firm, investor, or market factor category.

$\backslash$table$[[,$Firm Factor,Investor Factor,Market Factor$],[$The firm's competitive environment,,,$],[$Attitude toward risk,,,$],[$Business strategy and normal operations,,,$]]$