131

Which of the following questions should be considered when developing a corporation’s financial plan? I. How much net working capital will be needed? II. Will additional fixed assets be required? III. Will dividends be paid to shareholders? IV. How much new debt must be obtained?

What is the primary goal of corporate finance? a) To maximize revenue b) To maximize shareholder wealth c) To minimize costs d) To maximize market share

Which of the following will increase the WACC for a tax-paying company? Decrease the proportion of equity financing Decrease the proportion of debt financing Decrease the market value of the equity Increase the market value of the debt

If the management of a company would like to improve the company's return on equity, what should the management of the company do?

In business finance the generally accepted corporate objective is: Group of answer choices maximization of market share. maximization of shareholders’ wealth maximization of capital employed. maximization of profit.

What are the key factors a company should consider when determining its optimal capital structure, and how do these considerations impact major corporations such as Amazon, Coca-Cola, and Facebook (Meta) in terms of financial risk, operational flexibility, and long-term growth? How does the balance between debt and equity affect these companies' strategic decisions, market value, and overall cost of capital? What role do external factors like market conditions, interest rates, and tax regulations play in shaping their capital structure, and how do industry-specific dynamics influence their financial strategies? Additionally, how do companies ensure that their capital structure decisions align with shareholder interests, and what are the potential trade-offs they face between maintaining financial stability and pursuing aggressive growth strategies?

1. Dividend policy and free cash flow Company management, especially in established corporations, will formulate a policy that is often called a distribution policy or a payout policy. This policy specifies what management intends to do with the company’s profits and any free cash flow (FCF) generated by the firm. The objective is to create a distribution policy that increases the value of the firm and maximizes the wealth of the firm’s shareholders.   Which of the following factors affects management’s decisions regarding a firm’s distribution policy? Check all that apply.   -The level of debt and interest payments   -The level of cash distributions   -The form of payment to shareholders   -The stability of payments to shareholders     Management can make any form of distribution to the firm’s shareholders using the company’s free cash flow (FCF). The underlying objective is to maximize shareholder wealth by increasing the firm’s value. Any use of FCF…

What is the primary purpose of computing the cost of capital? a. To determine the market value of the company's shares b. To assess the company's liquidity position c. To evaluate the profitability of investment projects d. To compare the company's performance with industry peers

What is the purpose of financial leverage in finance? a) To increase the company's liquidity b) To reduce the company's risk c) To increase the company's profitability d) To magnify the company's returns and risks

Indicate whether each of the following statements is true or false. Support your answers with the relevant explanations. a) The higher the proportion of equity in a company’s overall capital structure, thehigher return required by its debtholders. (Explain your reasoning – provide a numerical example supporting your answer.)  b) In the presence of corporate taxes, a company would prefer to raise debt onlywhen the benefits of the tax shield fully offset the cost of debt. (Explain yourreasoning –  provide a numerical example supporting youranswer.)  c) In the presence of bankruptcy risk, the cost of capital of a company with debt is always higher than the cost of capital of an unlevered company. (Explain yourreasoning –, provide a numerical example supporting youranswer.)

The following are some of the factors that influence the market price of a corporation: I.  Industry prospects where the company operates II. Dividend declaration III. Management competency in terms of operating efficiency of the company IV. Profitability and good liquidity of the business Which of the above are external factors uncontrollable by the management?   II and III   None of the above   II, III, and IV   I and IV

please answer all questions