1. When can you use the discounted cash flow model of calculating a firm’s stock price? When can you not use it?
2. What is the weighted average cost of capital and how is it used? What does it mean? Is it after tax or before tax?
3. Regarding preferred stock, do holders have voting rights? Are dividends fixed? Do they have a higher or lower required return than common equity? Why?
4. What is the clientele effect of dividend theory? The bird in the hand theory?
5. What is it mean for two projects to be independent or mutually exclusive?
6. Why is NPV superior to other capital budgeting methods?
7. What are the advantages and disadvantages of using the payback method of evaluating projects?
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1. When can you use the discounted cash flow model of calculating a firm’s stock price? When can you not use it? 2. What is the weighted average cost…
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