1. Operating cash flows, rather than accounting profits, are used in project analysis. What is the basis for this emphasis on cash flows as opposed to net income?
2. The market value of a firm’s equity is frequently called:
a. Market capitalization. b. Total financing. c. Debt-equity consolidation. d. Debt-equity reconciliation. e. Total assets.
The Johnson Company just paid an annual dividend of $1.55. How much would you be willing to pay for one share of Johnson Company stock if the dividend remains constant and you require a 9.5% rate of return?
a. $16.32
b. $17.78
c. $18.21
d. $16.84
e. $19.38