1. Which one of the following statements related to common stock is correct?
A) Common stock has a predetermined maturity date.
B) Corporations are obligated to pay annual coupon interest payment to its common stockholders.
C) Corporations have the right not to pay dividends to common stockholders.
D) Non-payment of dividends leads to bankruptcy.
E) Corporations are obligated to pay constant quarterly dividends to its common stockholders.
2. A firm has sales of $20,000,000 and a tax rate equal to 25%. If the cost of goods sold is 70% of sales,SG&A is 10% of sales, and depreciation is $300,000, the firm’s operating cash flow after tax is:
a. Less than $1.0 million
b. Greater than $1.0 million and less than or equal to $2.0 million
c. Greater than $2 million and less than or equal to $3 million
d. Greater than $3 million
e. Cannot be determined with this information
PLEASE EXPLAIN HOW YOU GOT TO YOUR ANSWER