Introduction to Finc

Question 19 4 pts Which of the following would be the correct reason why firms should try to pay a preferred dividend? Cannot pay a common dividend until preferred is paid first. It could otherwise be difficult to raise additional funds. Preferred stockholders may gain control of the firm. All of the above. Question 21 4 pts Which of the following best describes why there is a cost associated with retained earnings. Earnings could be reinvested or paid out as accounts receivable so we don't have to pay anyone for a while. There is no cost because we can charge our investors an additional fee to cover all of our costs. If earnings are retained, there is an opportunity cost for the return stockholders could earn on alternative investments of equal risk. Retained earnings is charged an interest expense every year that is required to be paid for by the owner. Question 23 4 pts Which of the following best explains the rationale for the NPV Method? The present value of the inflows plus the cost equals the net gain in wealth If projects are independent of each other, then accept the project with the NPV