Homework Answers
For the questions based on drop down:
1. Plese select Capital Budgeting from the drop down menu.
2. Plese select Capital Structure from the drop down menu.
3. Plese select Dividend Policy from the drop down menu.
Multiple choice Question:
The correct answer is the second option Capital Structure
Capital budgeting decisions - Firm factor
Government laws and regulations - Market Factor Government laws
and regulations
age and life style - Investor
factor
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5. Financial management decisions and their effect on firm value Financial managers make a variety of...
Match the right term to the definition 5. Fihahclal mahagement decisions and their effect oh tIPm...
Match the right term to the definition
5. Fihahclal mahagement decisions and their effect oh tIPm Valle Financial managers make a variety of decisions that can affect a firm's value. These include capital budgeting, capital structure, and dividend policy decisions. A financial manager's decisions and actions are evaluated against the criterion of their effect on the price of the firm's common stock. Good decisions result in increasing share prices and increasing shareholder wealth, while poor decisions achieve the opposite result....
QUESTION 5 Which of the following financial management decisions deals with how the firm's earnings should...
QUESTION 5 Which of the following financial management decisions deals with how the firm's earnings should be distributed? Capital structure Financing Investment Dividend Working capital QUESTION 6 Suppose a firm is considering acquiring another firm. This financial management activity is part of: Capital structure decision Financing decision Investment decision Dividend decision Working capital decision
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: O Changes in net working capital associated with the project The project's financing costs The project's depreciation expense The project's fixed-asset expenditures Indirect cash flows often affect a firm's capital budgeting decisions. However, some of these indirect cash flows are...
Why focus on the optimal capital structure? A company's capital structure decisions address the ways a...
Why focus on the optimal capital structure? A company's capital structure decisions address the ways a firm's assets are financed (using debt, preferred stock and common equity capital) and is often presented as a percentage of the type of financing used As with all financial decisions, the firm should try to set a capital structure that maximizes the stock price, or shareholder value. This is called the optimal capital structure Which of the following statements regarding a firm's optimal capital...
11. Dividends, repurchases, and firm value Remember that the primary goal of a firm is to...
11. Dividends, repurchases, and firm value Remember that the primary goal of a firm is to maximize shareholder wealth by increasing the firm's intrinsic value. It is thus important to understand the impact of distributions- both in the form of dividends or stock repurchases-on the firm's value. Consider the following situation Rihana is a financial analyst in BTR Warehousing. As part of her analysis of the annual distribution policy and its impact on the firm's value, she makes the following...
9. Factors that influence dividend policy Аа Аа Distribution decisions are complicated and involve the understanding...
9. Factors that influence dividend policy Аа Аа Distribution decisions are complicated and involve the understanding of critical strategic factors that affect the policy and value of a firm. Thus, the management of any firm has to consider the constraints on dividend payments, the availability and cost of alternative sources of capital, and other external factors when they create and implement their distribution policy. Consider the following restriction: Restrictions on dividend payments not to exceed the total amount of retained...
Your firm adheres strictly to the residual dividend model. All else equal, which of the following...
Your firm adheres strictly to the residual dividend model. All else equal, which of the following factors would be most likely to lead to an increase in the firm's dividend per share? Earnings are unchanged, but the firm issues new shares of common stock. The firm's net income increases. The company increases the percentage of equity in its target capital structure. The number of profitable potential projects increases. O Congress lowers the tax rate on capital gains, leaving the rest...
Your firm follows a strict residual dividend policy. All else equal, which of the following factors...
Your firm follows a strict residual dividend policy. All else equal, which of the following factors would be most likely to lead to an increase in your firm's dividend per share? The company reduces the percentage of debt in its target capital structure. The number of profitable potential projects increases. Congress lowers the tax rate on capital gains. Earnings are unchanged, but the firm buys back shares of common stock. The firm's net income decreases.
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's financing costs The project's depreciation expense Changes in net working capital associated with the project The project's fixed-asset expenditures O Indirect cash flows often affect a firm's capital budgeting decisions. However, some of these indirect cash flows are...
One of the most important financial management activities that a firm undertakes is its evaluation and...
One of the most important financial management activities that a firm undertakes is its evaluation and allocation of investment funds to support its future survival and growth. These activities may be motivated by the desire to expand the firm's revenues, reduce its costs, or satisfy its mandatory or voluntary legal, health, and safety requirements. They may have, more or less, multiyear effects on the organization and may or may not be considered as capital budgeting activities. Capital budgeting is the...
Match the right term to the definition
5. Fihahclal mahagement decisions and their effect oh tIPm Valle Financial managers make a variety of decisions that can affect a firm's value. These include capital budgeting, capital structure, and dividend policy decisions. A financial manager's decisions and actions are evaluated against the criterion of their effect on the price of the firm's common stock. Good decisions result in increasing share prices and increasing shareholder wealth, while poor decisions achieve the opposite result....
QUESTION 5 Which of the following financial management decisions deals with how the firm's earnings should be distributed? Capital structure Financing Investment Dividend Working capital QUESTION 6 Suppose a firm is considering acquiring another firm. This financial management activity is part of: Capital structure decision Financing decision Investment decision Dividend decision Working capital decision
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: O Changes in net working capital associated with the project The project's financing costs The project's depreciation expense The project's fixed-asset expenditures Indirect cash flows often affect a firm's capital budgeting decisions. However, some of these indirect cash flows are...
Why focus on the optimal capital structure? A company's capital structure decisions address the ways a firm's assets are financed (using debt, preferred stock and common equity capital) and is often presented as a percentage of the type of financing used As with all financial decisions, the firm should try to set a capital structure that maximizes the stock price, or shareholder value. This is called the optimal capital structure Which of the following statements regarding a firm's optimal capital...
11. Dividends, repurchases, and firm value Remember that the primary goal of a firm is to maximize shareholder wealth by increasing the firm's intrinsic value. It is thus important to understand the impact of distributions- both in the form of dividends or stock repurchases-on the firm's value. Consider the following situation Rihana is a financial analyst in BTR Warehousing. As part of her analysis of the annual distribution policy and its impact on the firm's value, she makes the following...
9. Factors that influence dividend policy Аа Аа Distribution decisions are complicated and involve the understanding of critical strategic factors that affect the policy and value of a firm. Thus, the management of any firm has to consider the constraints on dividend payments, the availability and cost of alternative sources of capital, and other external factors when they create and implement their distribution policy. Consider the following restriction: Restrictions on dividend payments not to exceed the total amount of retained...
Your firm adheres strictly to the residual dividend model. All else equal, which of the following factors would be most likely to lead to an increase in the firm's dividend per share? Earnings are unchanged, but the firm issues new shares of common stock. The firm's net income increases. The company increases the percentage of equity in its target capital structure. The number of profitable potential projects increases. O Congress lowers the tax rate on capital gains, leaving the rest...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's financing costs The project's depreciation expense Changes in net working capital associated with the project The project's fixed-asset expenditures O Indirect cash flows often affect a firm's capital budgeting decisions. However, some of these indirect cash flows are...
One of the most important financial management activities that a firm undertakes is its evaluation and allocation of investment funds to support its future survival and growth. These activities may be motivated by the desire to expand the firm's revenues, reduce its costs, or satisfy its mandatory or voluntary legal, health, and safety requirements. They may have, more or less, multiyear effects on the organization and may or may not be considered as capital budgeting activities. Capital budgeting is the...
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