part B: Multiple Choice & Problems (1-5: 5 points cach 6-11: 8 points cach) 1. A major disadvantage of the payback period method is that it a is useless. b. ignores cash flows beyond the payback period. c. does not directly account for the time value of money. d. allows any project to be acceptable. c. both b. and c. are correct Which of the following statement is false? a. the NPV of a typical investing type project will be positive if the IRR is less than the cost of capital. b. if the multiple IRR problem does not exist, any independent project acceptable by the NPV method will also be acceptable by the IRR method. c. when IRR=r(the cost of capital), NPV =0. d. even if the NPV is negative, IRR can be positive. e. the NPV method is not affected by the multiple IRR problem. Which of the following should not be included in your company's capital budgeting decision making? a. shipping and installation costs. b. changes in net working capital c. sunk costs d. opportunity costs e side effects (externalities) Inform Co. just paid a dividend of $2.50 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year. If investors require a 9 percent return on Inform's stock, what will be the price of Inform's common stock in three years? a $54.25 b. $55.63 c. S56.85 d. $58.25 e. $60.78 Citicorp is expected to pay the following dividends over the next three years: $5, 87, and $3. Afterwards, the company pledges to maintain a constant 6 percent rate in dividends, forever. If the required return on the stock is 10 percent, what is the current share price? a. $79.50 b. $78.28 c. $75.36 d. $73.24 e. $72.31 onu are mutually exclusive and