Pacific corporation just paid an annual dividend of $1.50 per share on its common stock. Dividends are expected to grow at an annual rate of 4% here after. If the risk free rate is 2.5%, MRP is 7% and Pacific's stock is only half as risky as the market on average, what is the most that you should be willing to pay for a share of the stock today?

A) $54.26 B) $63.17 C) $75.00 D) $78.00

You expect that three years from today, Periwinkle corporation will begin paying its first ever dividend of $4.00 a share, an amount that will be held constant. If you require a rate of return of 10%, what is the most that you should be willing to pay TODAY for a share of Periwinkle's preferred stock?

A) $30.05 B) $33.06 C) $37.68 D) $40.00

Ceteris paribus, if a company's tax rate is 40%, an increase in depreciation expense of $3,000, would cause net income to go ___ and the firm's cash to go ___.

A) Up by $1,200: down by $1,800 B) Down by $1,800: down by $1,200 C) Down by $1,800: up by $1,200 D) up by $1,800: down by $1,800

Assume the following: Cash flow from assets= minus $10: interest expense= $5: dividends = $8: and the firm repurchased stock in the amount of $20. According to the cash flow identity, this firm ____ its long term debt by ___.

A) reduced: $43 B) increased : $43 C) increased: $53 D) reduced; $53

Cash and Equivalents = $14,000: Accounts Receivable= $28,000: Accounts Payable = $18,000 Short term debt= $4000: Inventories= $16,000, Other current liabilities= $12,000: and other current assets = $8,000. What is networking capital?

A) -$16,800 B) -$32,000 C) $32,000 D) $42,000