Kaplan Mt482 week 8 quiz

Jun 27th, 2016
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Question Question 1.1.The residual income model defines stock price as book value plus the present value of residual income. What is the effect on stock price in a given period if the firm's cost of capital is greater than its return on equity?(Points : 2) Cannot be determined No effect Stock price increases Stock price decreases Question 2.2.Gupta Corporation has forecasted its need for external funding in the following year. It needs to raise $2M in either debt or equity. It would like to minimize its need for external funding without decreasing its projected growth. Which of the following would reduce its need for additional funding?(Points : 2) An increase in the dividend payout ratio An increase in days sales outstanding An increase in accounts payable A decrease in inventory turnover Question 3.3.The treasurer of Simmons Corporation, a newly formed software company is trying to ascertain Simmons cash flows for the next three months. Expected sales are: 50% of sales a

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Kaplan Mt482 week 8 quizQuestionQuestion 1.1.The residual income model defines stock price as book value plus the present valueof residual income. What is the effect on stock price in a given period if the firm's cost of capitalis greater than its return on equity?(Points : 2)Cannot be determinedNo effectStock price increasesStock price decreasesQuestion 2.2.Gupta Corporation has forecasted its need for external funding in the followingyear. It needs to raise $2M in either debt or equity. It would like to minimize its need for externalfunding without decreasing its projected growth. Which of the following would reduce its needfor additional funding?(Points : 2)An increase in the dividend payout ratioAn increase in days sales outstandingAn increase in accounts payableA decrease in inventory turnoverQuestion 3.3.The treasurer of Simmons Corporation, a newly formed software company is tryingto ascertain Simmons cash flows for the next three months. Expected sales are:50% of sales are made for cash. Simmons expects to receive 25% in the month following the saleand 20% in the second month following the sale. The remaining 5% are expected to be uncollectible. Gross ma

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