Question

Multiple choices questions

The net present value method

a) is consistent with the goal of shareholder wealth maximization.

b) recognizes the time value of money.

c) uses all of a project's cash flows.

d) all of the above

The type of security which represents ownership in a firm with priority for dividends is called _____ stock.

         a)      convertible

         b)      senior

           c)      common

         d)      preferred

Answer 1

The net present value method:

Option D All of the Above. NPV considers Projects Cash Flows into its calculation, it uses Time value of money to calculate the present value of projects cash flows and it is consistent with the goal of shareholder wealth maximization as it consider cost of capital to calculate present of cash flows.

The type of security which represents ownership in a firm with priority for dividends is called _____ stock.

Preferred Stock. Preferred Stock is a form of stock whre the dividend is fixed to holder and will have priority over dividends of common stock

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