What must occur to make using net cash flows into the firm result in the san OA the firm must pay an increasing dividend payment each year OB. The cost of equity must be greater than the overall WACC OC. the firm must generate a rate of return on reinvested free cash flow e OP.All of the above mynt occur

What must occur to make using net cash flows into the firm result in the san OA the firm must pay an increasing dividend payment each year OB. The cost of equity must be greater than the overall WACC OC. the firm must generate a rate of return on reinvested free cash flow e OP.All of the above mynt occur

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter4: Analysis Of Financial Statements

Section: Chapter Questions

Problem 17P: CONCEPTUAL: RETURN ON EQUITY Which of the following statements is most correct? (Hint: Work Problem...

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Which of the following statement is true? Select one: O A. Increase in the operating net working capital will increase the free cash flow to equity O B. To issue new debt will increase the free cash flow to equity O C. To pay off the loan will increase the free cash flow to equity D. The increase in the capital expenditure will increase the free cash flow to equity The constant dividend growth model requires which of the following conditions? Select one: O A. g r O C. g is the lower than, or equal to, the growth rate of the economy O D. A and C O E. All of the above.
Define the term capital intensity. Explain how a decline in capital intensity would affect the AFN, other things held constant. Would economies of scale combined with rapid growth affect capital intensity, other things held constant? Also, explain how changes in each of the following would affect AFN, holding other things constant: the growth rate, the amount of accounts payable, the profit margin, and the payout ratio.
CONCEPTUAL: RETURN ON EQUITY Which of the following statements is most correct? (Hint: Work Problem 4-16 before answering 4-17, and consider the solution setup for 4-16 as you think about 4-17.) a. If a firms expected basic earning power (BEP) is constant for all of its assets and exceeds the interest rate on its debt, adding assets and financing them with debt will raise the firms expected return on common equity (ROE). b. The higher a firms tax rate, the lower its BEP ratio, other things held constant. c. The higher the interest rate on a firms debt, the lower its BEP ratio, other things held constant. d. The higher a firms debt ratio, the lower its BEP ratio, other things held constant. e. Statement a is false, but statements b, c, and d are true.
Can you please answer this part c follow up question: c) Suppose the initial £90,000 is raised by borrowing at the risk-free interest rateinstead of issuing equity. What are the cash flows to equity and debt holders, andwhat is the initial value of the levered equity according to Modigliani and Miller’sPropositions? Is the company’s cost of equity the same as before? Overall, can thecompany raise the same amount of capital as before? Explain your reasoning.
Answer quickly please The _________ is the internal rate of return a firm must earn on its investment in order to maintain the market value of its stock. a. IRR b. net profit margin c. Cost of Capital d. gross profit margin
13... What conditions are necessary for the Constant Dividend Growth Model to be used? Select all that apply. a.The required rate of return must be greater than the dividend growth rate. b.The dividend must be at least $3. c.The company must pay taxes. d.The company's dividend growth rate must be expected to remain constant.
QUESTION 6 Which of the following statements is true? O A. Companies look for investments with payback periods that are larger than their maximum accepted payback period O B. An investment with a profatibility index less than 1 is profitable and desirable OC.A projected is accepted if the IRR is less than the cost of capital O D. None of the above are true
QUESTION 16 If a firm uses the residual dividend model to set dividend policy, then dividends are determined as a residual after providing for the equity required to fund the capital budget. Under this model, the higher the firm's debt ratio, the lower its payout ratio will be, other things held constant. True False
QUESTION 6 Which of the following statements is true? O A. Companies look for investments with payback periods that are larger than their maximum accepted payback period O B. An investment with a profatibility index less than 1 is profitable and desirable O C.A projected is accepted if the IRR is less than the cost of capital O D. None of the above are true
Please answer this question 1. Sustainable growth rate, what must a firm do to grow faster a. Issue new debt b. Increase payout ration c. increase shareholders d. Raise new preferred.
Which of the following statements is most correct? (Hint: Work Problem 4-16 before answering 4-17, and consider the solution setup for 4-16, as you think about 4-17.) a. If a firm's expected basic earning power (BEP) is constant for all of its assets and exceeds the interest rate on its debt, then adding assets and financing them with debt will raise the firm' expected return on common equity (ROE). b. The higher its tax rate, the lower a firm's BEP ratio will be, other things held constant. c. The higher the interest rate on its debt, the lower a firm's BEP ratio will be, other things held constant. d. The higher its debt ratio, the lower a firm's BEP ratio will be, other things held constant. e. If a firm's expected basic earning power (BEP) is constant for all of its assets and exceeds the interest rate on its debt, then adding assets and financing them with debt will decrease the firm's expected return on common equity (ROE).
1. Using PROBLEM 1, how much is the projected net income for 2022? 2. Using PROBLEM 1, how much is the projected net cash flows from operating activities for 2026 must be? 3. Using PROBLEM 1, how much is the INTRINSIC Value of ABC Corporation? 4. Using PROBLEM 1, how much is the total present value of Free Cash Flows to ordinary shareholders of ABC Corporation? 5. Using PROBLEM 1, If your required return on investment is 12%, would you purchase the shares of ABC Corporation? Substantiate your answer. YES NO