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Shareholders only receive money after what is done? - Answer suppliers have been paid wages to workers have been paid. interest to bondholders have been paid. taxes have been paid. Capital Budgeting - Answer The process of determining exactly which assets to invest in and how much to invest; also called capital expenditure decision or capital investment decision. Future Value (FV) - Answer the amount to which a cash flow or series of cash flows will grow over a given period of tim...

CSC 2- Practice Exam 2 Q&A 2023 Update 1. Calculate what forecast might be made for the share price of BIB Inc. if projected earnings are $4 per share and the company has historically traded at a P/E of 20 during similar economic periods, which is similar to the P/E of BIB's industry. - Answer: $80 The P/E can be used to forecast a future price of a stock. In this example, if BIB has traded at a P/E ratio of about 20 during a similar economic period, further confirmed by the P/E of t...

Present Value PV = CF/(1+r)^n where CF = cash flow in future period r = interest rate n = number of periods Net Present Value NPV = - I + CF/(1+r)^n + ... + where I = initial investment PV of Perpetuity PV = C/R where: R= interest rate C= cash flow PV of Growing Perpetuity PV = C/(R-G) where: G= growth PV of Annuity PV = (C/r) [ 1- (1/(1+R)^N)] where R = interest rate N = years PV of growing Annuity PV = (C/(R-G)) (1-((1+G)/(1+R))^N) ...

1. In constant growth model, expected capital gains yield changes year to year. a. True b. False 2. Expected dividend divided by the current price of a stock is called a. Actual Dividend b. Dividend Growth c. Dividend Yield d. Dividend Payout. 3. Target (or optimal) capital structure is the percentages of debt, preferred stock, and common equity that maximizes the firm’s stock prices. a. True b. False 4. The reason for using MIRR is that a. a project may have multiple NPVs b. a projec...