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Hey guys, can I get some help with the following questions? 9. Oval Inc. has just paid a dividend of $1.50 per share on its
Hey guys, can I get some help with the following questions?
9. Oval Inc. has just paid a dividend of $1.50 per share on its common stock, and it expects this dividend to grow by 4 percent per year, indefinitely. The firm plans to issue common stock at $16. The firm's investment bankers believe that new issues of common stock would have a flotation cost equal to 4 percent of the current market price. Which of the following is the cost of newly issued common stock? (Round off the answer to two decimal places.) a. 14.16 percent b. 10.15 percent c. 15.36 percent d. 13.80 percent e. 16.92 percent 10. The method of forecasting financial requirements based on forecasted financial statements is known as the a. pro forma cash flow statements method b. pro forma retained earnings method c. forecasted income and expense method d. projected operating cash flow method e. projected balance sheet method 11. Which of the following statements is correct regarding cash budgets? a. Cash disbursements for credit purchases are not included in cash budgets. b. Only cash inflow from cash sales are included in cash budgets. c. The target cash balance set in cash budgets are fixed. d. Cash budgets do not include cash flow through investment activities. e. Cash budgets include the tax expenses of a firm. 12. A firm is evaluating a new machine to replace an existing, older machine. The change in depreciation is S3,000. The firm's marginal tax rate is 30 percent. Which of the following statements is true? a. Depreciation does not affect the calculation of the supplemental operating cash flow b. Depreciation is added to the after-tax net operating income to calculate the supplemental operating cash flow c. Depreciation expense is added to the initial outlay incurred to purchase an asset. d. Depreciation is deducted from the terminal cash flows from an asset. e. Depreciation is included in capital budgeting only if it exceeds the tax expense of an assetStep by Step Solution
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