Question

TRUE OR FALSE: Present Value of Growth Opportunities (PVGO) can only take on a positive value

Answer #1

This given statement is a false statement because present value of growth opportunities can be used in two scenarios when there are positive net present value method and negative net present value projects as growth model and no growth models respectively.

So there is a No growth model, which calculate the value of negative NPV projects so thethe given statement is false because it says that present value of growth opportunities can only be used in positive npv projects.

Share X has Earnings Per Share of 12 and its Present Value of
Growth Opportunities is $101.34. Given a market capitalization rate
of 18.85%, and a plowback ratio of 45%
calculate the Return on Equity for Share X.

True or False?
If market interest rate falls to zero, then bonds can be issued
at zero coupon rates and their market values would be zero.
FALSE
Interest rate risk for bonds decreases as bond maturity
decreases and as the frequency of bond interest payments rises.
TRUE
The fair market value of a stock rises with the expected
dividend growth rate. FALSE
Companies interested in maximizing shareholder value should
choose capital projects with a Net Present Value of at least...

1(a). (TRUE or FALSE?) Whenever there is a ranking conflict
between net present value and internal rate of return we generally
suggest that the project with the highest net present value be
chosen.
1(b). (TRUE or FALSE?) The acceptable independent projects can
be ranked by using the IRR methodology, from lowest to the highest
IRR.
1(c). (TRUE or FALSE?) When evaluating proposed projects with
the IRR method, those projects with IRRs that are less than the
required rate of return...

8. True or False. The net present value of one project cannot be
compared to the net present value of another project unless the
investments required for each are equal.
a. True
B. False
9. True or False. Benefits for using payback for analyzing
projects are a) it is easy to calculate and b) it ignores the time
value of money.
a. True
b. False
10. True or False. In the heading of a Statement of Cash Flow,
the time...

True or False: Based on the dividend growth model, the value
of common stock decreases with growth rate of dividends.

True or False? Greater compounding frequency will result in a
larger present value

Greater compounding frequency will result in a larger present
value.
True or false

True False Questions
1.
We can calculate the present value of perpetuity by dividing the
annual cash inflow by the required
interest rate.
2.
Capital budgeting can be defined as analyzing alternative long-term
investments and deciding which
which assets may be acquired.
3.
Limited funds being available for investment purposes is never a
consideration in firm
making an investment decision..
4.
In the investment decision making process, the time value of money
should be given
consideration..

1(a). (TRUE or FALSE?) Financial managers should not rely on the
net present value method as a primary decision method.
1(b). (TRUE or FALSE?) If the value of one currency decreases
relative to the value of another currency, the currency with the
falling value is said to be strengthening.
1(c). (TRUE or FALSE?) Perpetuities contain an infinite number
of annuity payments.

True or False: The sum of the present value discount factors for
1...n years equals the present value factor for an annuity at year
n.

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