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If Congress eliminates taxes on capital gains but leaves the personal tax rate on dividends unchanged, this would motivate companies to increase their dividend payout ratiosEDespite its drawbacks, following the residual dividend policy will tend to stabilize actual cash dividends, and this will make it easier for firms to attract a clientele that prefers high dividends, such as retireesQUESTION:5[QUESTION BANK ID:269596]TYPE:MULTIPLE CHOICECORRECT
Langston Labs has an overall (composite) WACC of 10%, which reflects the cost of capital for its averageasset. Its assets vary widely in risk, and Langston evaluates low-risk projects with a WACC of 8%, average-risk projects at 10%, and high-risk projects at 12%. The company is considering the following projectsProjectRiskExpected ReturnAHigh15%BAverage12%CHigh11%DLow9%ELow6%Which set of projects would maximize shareholder wealth? << HIDE ANSWERSQUESTION:6[QUESTION BANK ID:269431]TYPE:MULTIPLE CHOICECORRECTWhich of the following statements is correct?
<< HIDE ANSWERSQUESTION:7[QUESTION BANK ID:269423]TYPE:MULTIPLE CHOICECORRECTWhich of the following statements is correct? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. << HIDE ANSWERS