Question
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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