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Finance questions

3. If D0 = $2.25, g (which is constant) = 3.5%, and P0 = $50, what is the stock's expected dividend yield for the coming year?

a. 4.42%
b. 4.66%
c. 4.89%
d. 5.13%
e. 5.39%

8. Taggart Inc. is considering a project that has the following cash flow data. What is the project's payback?

Year 0 1 2 3
Cash flows -$1,150 $500 $500 $500

a. 1.86 years
b. 2.07 years
c. 2.30 years
d. 2.53 years
e. 2.78 years

10. The relative risk of a proposed project is best accounted for by which of the following procedures?

a. Adjusting the discount rate upward if the project is judged to have above-average risk.
b. Adjusting the discount rate downward if the project is judged to have above-average risk.
c. Reducing the NPV by 10% for risky projects.
d. Picking a risk factor equal to the average discount rate.
e. Ignoring risk because project risk cannot be measured accurately

22. Inmoo Company's average age of accounts receivable is 45 days, the average age of accounts payable is 40 days, and the average age of inventory is 69 days. Assuming a 365-day year, what is the length of its cash conversion cycle?

a. 63 days
b. 67 days
c. 70 days
d. 74 days
e. 78 days

Solution Preview

3. Dividend yield for coming year = D1/P0
D1 = D0 X (1+g) = 2.25 X (1+3.5%) = 2.32875
P0 = $50
Dividend yield = 2.32875/50 = 4.66%

8. Payback period is ...

Solution Summary

The solution explains some finance questions relating to stock's expected dividend; project payback; proposal risk; cash cycle