Question 1: Mark Walker Inc plans to issue preferred stock with a perpetual annual dividend of $2 per share and a par value of $25. If the required return on this stock is currently 8%, what should be the stock's market value?
a. $22.00
b. $23.00
c. $24.00
d. $25.00
e. $26.00
Question 2: A firm with a cost of capital of 13 percent is evaluating three capital projects. The internal rates of return are as follows:
Project Internal Rate of Return
1 12%
2 15
3 14
Question 3: The firm should __________.
a- accept Project 2 and reject Projects 1 and 3
b- accept Projects 2 and 3 and reject Project 1
c- accept Project 1 and reject Projects 2 and 3
d- accept Project 3 and reject Projects 1 and 2
Question 4: A firm is evaluating an investment proposal which has an initial investment of $5,000 and cash flows presently valued at $4,000. The net present value of the investment is __________.
A) -$1,000
B) $0
C) $1,000
D) $1.25