Managerial Finance Problem Review Set Capital Budgeting
In theory, any capital budgeting investment rule should depend solely on
forecasted cash flows and the opportunity cost of capital. The rule itself
should not be affected by managers' tastes, the
1-1 a. A proprietorship, or sole proprietorship, is a business owned by one individual. A
partnership exists when two or more persons associate to conduct a business. In
contrast, a corporation is a legal entity created by a state. The corporation is sepa
3-2 The four financial statements contained in most annual reports are the balance sheet,
income statement, statement of retained earnings, and statement of cash flows.
3-3 No, because the $20 million of retained earnings would probably not be held as cas
Managerial Finance Problem Review Set Stock Valuation
The constant growth DCF model used to evaluate the prices of common
stocks is essentially the same as the model used to find the price of
perpetual preferred stock or any other perpetuity.