1. Bechtel Machinery stock currently sells for $50 per share. The market requires a 15 percent return on the firm's stock. The company maintains a constant 8 percent growth rate in dividends. What was the most recent annual dividend per share paid on this stock?
A $3.00
B $3.24
C $3.50
D $3.67
E $3.91
2. A company is considering a project that costs $150,000 and is expected to generate cash flows of $50,000, $52,000, $53,000 in the coming three years. The average book value of the projects is $75,000. Which of the following must be correct?
A. The market value of the project is $155,000
B The profitability index of the project is 1.03
C The average account return is 68.9%
D The internal rate of return cannot be determined, as the required return is not given
E None of the above
3. A project lasts for 3 years and has expected cash flow of $23,000, $32,000 and $21,000 in the next three years. The project costs $54,000. The required return is 5%. WHICH OF THE FOLLOWING ARE CORRECT?
I The project's payback period is 1.97 years.
II The project's discounted payback period is shorter than 2.17 years
III The project is rejected by the discounted payback period rule when the required payback period is 1 year
IV The project is accepted by the payback period rule when the required payback period is 3 years
A I and II only
I and IV only
I,II and III only
I, II and IV only
E I, II, III and IV
4. A project is expected to generate cash flow of $50,000, $40,000 and $60,000 and net income of $20,000, $12,000 and $23,000 over the project's life. The project needs a fixed asset that costs $120,000 and is expected to depreciate by $40,000 every year. What is the average account return of this project?
A 15.3%
B 30.6%
C 80.3%
D none of the above
5. A company is considering two mutual exclusive project: Project A has an IRR of 12% while project B has an IRR of 5%. Which of the following(s) is(are) CORRECT?
A Project A must be taken as IRR rule and net present value rule always lead to identical results
B If project A is accepted by the IRR rule, its required return must be greater than 12%
C If project B is rejected by the IRR rule, its required return must be greater than 5%
D Both A and B of the above
E Both A and C of the above