WACC 9.00% Year Cash flows Present Value $1,000$91.74 $168.34 a. $8.26 b. $9.00 . $18.00 231.88 d. $31.66 e. Cannot be determined 38. In capital budgeting analysis, do you always accept projects and IRR with the highest positive NPV way to determine the attractiveness of the a. Yes, because it is the most scientific and objectiv project No, other qualitative factors like timing of cash flow, size of the investment outlay and or IRR are the highest mportance of the project play a role too even if the positive NPV or lre e It depends on whether the projects are independent or mutually exclusive. d. Two of the above are correct. e. None of the answers above are correct. 39. In determining which mutually exclusive IRR at cross-over point. Which factors contribute to this situation? we may encounter conflictitn and another a high have a a Differences in timing of cash flow and size of project b. Non-normal vs. normal cash flow stream c. Both answers (a) and (b) are correct. d. Neither answers (a) nor (b) is correct. e. I don't really know the answer 40. Which of the following statement is false? The optimal distribution policy strikes the balance between current dividends and capital a. s that maximizes the firm's stock price. rate should be. f c. If investors prefer firms that retain most of their earnings, then a firm that wants to maximize its stock price should set a low payout ratio. d. A 100% stock dividend and a 2-1 stock split should, at least conceptually, have the same effect on the firm's stock price e. A reverse split" reduces the number of shares outstanding 41. If a firm adheres strictly to the residual dividend model, the issuance of new common stock would suggest that a. the dividend payout ratio has remained constant. b. the dividend payout ratio is increasing c. no dividends will be paid during the year d. the dividend payout ratio is decreasing. e the dollar amount of capital investments had decreased. 42. Which of the following actions will best enable a company to raise additional equity capital, other things held constant? a. Refund long-term debt with lower cost short-term debt b. Declare a stock split. c. Begin an open-market purchase dividend reinvestment plan. d. Initiate a stock repurchase program. e. Begin a new-stock dividend reinvestment plan