QUESTION 14 Which of the following is NOT stated in the lecture notes supporting the dividend preference (Bird-in-the-hand) theory? High payouts increase agency costs by causing managers to have more scrutiny by going to the external capital markets more often Investors value high payout firms more highly and require a lower return to induce them to buy its stock. High payouts reduce agency costs by depriving managers of cash to waste. All of the choices are mentioned in the lecture notes supporting this theory, High payouts decrease agency costs by causing managers to have more scrutiny by going to the external capital markets more often QUESTION 15 Capital budgeting projects include all of the following methods except for which one (according to the class slides)? Modified Profitability Index Payback period Net Present Value Modified IRR Discounted payback period QUESTION 16 Which of the following is NOT a problem in determining incremental cash flows, according to the class notes? Externalities Financing costs Sunk costs None of the choices are listed in the class slides as causing problems in determining incremental cash flows. Opportunity costs