The financial managers of Microfibre, Inc. often try their best to maximize the current value per share of the firm's existing stock. The reason for this is :

Multiple Choice

• doing so guarantees the company will grow in size at the maximum possible rate.

• managers often receive shares of stock as part of their compensation.

• this will increase the current dividends per share.

• doing so increases employee salaries.

• None of the choices provided is the correct reason.

Karla, being a financial manager, is conducting the capital budgeting analysis on an investment project (to be exact, the addition of a new store) for her company. Which of the following need(s) to be taken into consideration by her?

I. amount of cash to be kept II. timing of all projected cash flows III. dollar amount of each projected cash flow IV. proportion of the project funded by borrowing

Multiple Choice

• I, II, and III only

• I and IV only

• II and III only

• I, II, and IV only

• I, II, III, and IV

When calculating the sustainable growth rate for her firm, my mother takes the retention ratio (b) as equal to ___________________.

Multiple Choice

• one plus the dividend payout ratio

• addition to retained earnings divided by dividends paid

• net income minus additions to retained earnings

• net income minus cash dividends

• addition to retained earnings divided by net income