1. Leroy bought a share of stock for $47.50 that paid a dividend of $.72 and sold one year later for $51.38. What was Leroy's dollar profit or loss and holding period return?
A) $3.88, 9.68%
B) $4.60, 9.68%
C) $3.88, 8.95%
D) $0.72, 7.55%
2. The ________ model is usually considered the best of the capital budgeting decision-making models
A) Profitability Index (PI)
B) Discounted Payback Period
C) Internal Rate of Return (IRR)
D) Net Present Value (NPV)
3. Consider the following four-year project. The initial after-tax outlay or after-tax cost is $1,000,000. The future after-tax cash inflows for years 1, 2, 3 and 4 are: $400,000, $300,000, $200,000 and $200,000, respectively. What is the payback period without discounting cash flows?
4.0 years
3.0 years
2.5 years
3.5 years