1. Hewitt Packing Company has an issue of $1,000 par value bonds with a 14 percent annual coupon interest rate. The issue has ten years remaining to the maturity date. Bonds of similar risk are currently selling to yield a 12 percent rate of return. The current value of each Hewitt bond is ________.
A. $791.00
B. $1,113.00
C. $1,052.24
D. $1,000
2. The first step in the capital budgeting process is ________.
A. decision making
B. implementation
C. proposal generation
D. review and analysis
3. Which of the following is a disadvantage of issuing preferred stock from the common stockholders' perspective?
A. Issuance of preferred stocks will result in a higher risk, to the disadvantage of common stockholders.
B. The preferred stockholders are always paid a higher proportion of dividend payments.
C. The preferred stockholders have superior voting rights in the selection of board of directors.
D. There is a seniority of preferred stockholder's claim over common stockholders.