FOUR:

Which of the following methods does not consider the time value of money?

a.IRR

b.NPV

c.Payback

d.None of the above

When performing sensitivity analysis:

a.Statistical methods should not be employed

b.Electronic spreadsheets make the job more manageable

c.Assumptions should be changed one at a time

d.All of the above

e.B & C

Projected sales growth assumes

a.Adequate asset base

b.Decrease in property, plant and equipment

c.Decrease in Accounts Receivable

d.Decrease in inventory

e.None of the above

Which of the following limits a firm's ability to raise equity through retained earnings?

a.Set dividends policy

b.Low P/E

c.High P/E

d.None of the above

The 'efficient market' theory seems to be reasonable because:

a.there are fewer financial analysts valuing securities

b.there are hundreds of investors trying to make money from improperly valued securities, and the market forces which result in driving stock prices to a fair value

c.A and B

d.None of the above

A firm's dividend policy impacts the firm's ability to finance through

a.Retained earnings

b.Stock issue

c.Long term debt

d.None of the above

In a new issue, the ____are those funds that remain after the necessary fees have been deducted

a.working capital

b.Free cash flow

c.Net proceeds

d.None of the above