1) An investor has the opportunity to invest in four new retail stores. The amount that can be invested in each? store, along with the expected cash flow at the end of the first? year, the growth rate of the? concern, and the cost of capital is shown for each case. It is assumed each investment will operate in perpetuity after the initial investment. Which investment should the investor? choose?
A. Initial? investment: $100,000; Cash flow in year? 1: $12,000; Growth? Rate: 1.25%; Cost of? Capital: 9.5?%
B. Initial? investment: $90,000; Cash flow in year? 1: $10,000; Growth? Rate: 1.50%; Cost of? Capital: 9.1?%
C. Initial? investment: $80,000; Cash flow in year? 1: $8000; Growth? Rate: 1.75%; Cost of? Capital: 8.4?%
D. Initial? investment: $60,000; Cash flow in year? 1: $6000; Growth? Rate: 2.50%; Cost of? Capital: 7?%
2) You own 30% of the stock of a company that has 10 directors on its board. How much representation can you get on the board if the company has cumulative? voting? How much representation can you ensure if the company has straight? voting?
How much representation can you get on the board if the company has cumulative? voting? ?(Select the best choice? below.)
A. With cumulative voting you vote on each director? individually, and without a majority of the shares you cannot ensure that your representative will win any of the elections? (you could lose 70% to 30% in each of the ten individual? elections).
B. With cumulative voting you are able to get proportional representation by putting all of your votes toward 3 ?directors, allowing you to elect representatives to 3 seats ?(30% of ten? seats) on the board.
How much representation can you ensure if the company has straight? voting? ?(Select the best choice? below.)
A. With? non-cumulative voting you are able to get proportional representation by putting all of your votes toward 3 ?directors, allowing you to elect representatives to 3 seats ?(30% of ten? seats) on the board.
B. With? non-cumulative voting you vote on each director? individually, and without a majority of the shares you cannot ensure that your representative will win any of the elections? (you could lose 70% to 30% in each of the ten individual? elections).