QUESTION 5 Which of the following is a cash inflow? O a. paying property taxes b

Question

QUESTION 5 Which of the following is a cash inflow? O a. paying property taxes b. collecting an account receivable O c. distributing a stock dividend. Od.retiring an account payable QUESTION 6 According to the dividend-growth model, the valuation of common stock depends on 1. the firm's dividends 2. investors' required rate of return 3. the prior year's dividends Oa. 1 and 2 Ob. 1 and3 c. 2 and3 d. all of the above QUESTION 7 If the required rate of return is 10 percent and the stock pays a fixed $5 dividend, its value is a. $100 b. $50 O c. $75 d. $25

Explanation / Answer

5
a is a cash outflow
b is a cash inflow
c is a cash outflow
d is a cash outflow

Hence option b is applicable


6)According to DDM value of stock depends on future dividends and required rate of return
The prior year dividends have no effect

Hence option a is correct


7)Value = Cash outflow/required return
5/0.10=$50

Hence option b is correct

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