Problem 1: If D0 = $2.25, g (which is constant) = 3.5%, and P0 = $50, what is the stock's expected dividend yield for the coming year?
a. 4.42%
b. 4.66%
c. 4.89%
d. 5.13%
e. 5.39%
Problem 2: Taggart Inc. is considering a project that has the following cash flow data. What is the project's payback?
Year 0 1 2 3
Cash flows -$1,150 $500 $500 $500
a. 1.86 years
b. 2.07 years
c. 2.30 years
d. 2.53 years
e. 2.78 years
Problem 3: The relative risk of a proposed project is best accounted for by which of the following procedures?
a. Adjusting the discount rate upward if the project is judged to have above-average risk.
b. Adjusting the discount rate downward if the project is judged to have above-average risk.
c. Reducing the NPV by 10% for risky projects.
d. Picking a risk factor equal to the average discount rate.
e. Ignoring risk because project risk cannot be measured accurately
Problem 4: Inmoo Company's average age of accounts receivable is 45 days, the average age of accounts payable is 40 days, and the average age of inventory is 69 days. Assuming a 365-day year, what is the length of its cash conversion cycle?
a. 63 days
b. 67 days
c. 70 days
d. 74 days
e. 78 days