This corporation pays a 5% dividend. If the current stock price is $50 per share, what is the annual dividend? a.$5.00 b. $.05 c. $2.50 d. $25.00

Real options affect the size, but not the risk, of a project's expected cash flows. a. True OR b. False

Which of the following is NOT a real option? a. The option to buy shares of stock if its price goes up. b. The option to abandon a project. c. The option to switch the type of fuel used in an industrial furnace. d. The option to expand into a new geographic region. e. The option to expand production if the product is successful.

Conflicts between two mutually exclusive projects occasionally occur, where the NPV method ranks one project higher but the IRR method ranks the other one first. In theory, such conflicts should be resolved in favor of the project with the higher positive NPV. a.True OR b. False

Projects C and D both have normal cash flows and are mutually exclusive. Project C has a higher NPV if the cost of capital is less than 12%, whereas Project D has a higher NPV if the cost of capital exceeds 12%. Which of the following statements is CORRECT? a. Project D is probably larger in scale than Project C. b. Project C probably has a faster payback. c. The crossover rate between the two projects is below 12%. d. Project C probably has a higher IRR. e. Project D probably has a higher IRR.