BUS 5440 Final Exam 1, Questions And Answers

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BUS 5440 Final Exam 1, Questions And Answers.Your test grade is 93.33% The professor has configured this test to allow students to: Show Questions Answered Correctly Show Questions Answer... ed Incorrectly Show All Responses Selected By Student Show What The Correct Response Should Be QUESTION: 1 TYPE: MULTIPLE CHOICE [QUESTION BANK ID: 269594] CORRECT Which of the following statements is correct? A One advantage of dividend reinvestment plans is that they enable investors to avoid paying taxes on the dividends they receive B If a company has an established clientele of investors who prefer a high dividend payout, and if management wants to keep stockholders happy, it should not follow the strict residual dividend policy C If a firm follows a strict residual dividend policy, then, holding all else constant, its dividend payout ratio will tend to rise whenever the firm’s investment opportunities improve D 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 ratios E Despite 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 retirees QUESTION: 2 TYPE: MULTIPLE CHOICE [QUESTION BANK ID: 269596] CORRECT Langston Labs has an overall (composite) WACC of 10%, which reflects the cost of capital for its average asset. 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 projects [Show More]

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