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Methods used to develop a purchase price for a company in an acquisition include a. Comparison to past purchases of similar companies b. Discounted cash

Methods used to develop a purchase price for a company in an acquisition include

a.

Comparison to past purchases of similar companies

b.

Discounted cash flow analysis of projected future earnings from the acquisition

c.

Setting the price equal to the current book value of the company

d.

All of the above

e.

a and b

Which one of these determines the minimum acceptable rate of return on a capital investment?

a.

The firms weighted average cost of capital

b.

The current profit margin of the firm

c.

The rate of return on the firm's outstanding shares

d.

The firm's after-tax cost of long-term debt

Quality Plastics, Inc. is expected to pay a dividend of $5 per share at yearend and the dividend is expected to grow at 4 percent annually. The stock currently sells at $50 per share. What is the expected rate of return on the stock?

a.

10%

b.

14%

c.

6%

d.

12%

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