In capital budgeting analysis, the “bid price” can be defined as:

The financial manager can rely on both the IRR and the NPV for project selections when: 

In comparing two projects using a NPV profile, at the point where the net present values of the projects involved are equal, ________.

What is the payback period of a $10,000 investment with the following cash flows? Year                              1                2              3              4                       Cash Flow            +$3,000      +$4,000    +$5,000    +$6,000    

Which of the following is true with regards to special cases in capital budgeting? I)  Setting the bid price requires finding the sales price point at which the project NPV is equal to zero. II)  In a cost-cutting proposal the reduction in costs has the same effect as an increase in sales.  III) The equivalent annual cost (EAC) is used to evaluate mutually exclusive projects with different economic lives if the projects are expected to be continuously replicated.

Which one of the following is a disadvantage of the discounted payback method?

Llano’s stock is currently selling for $50.00. The expected dividend one year from now is $2 and the required return is 8%. What is this firm’s dividend growth rate assuming the constant dividend growth model is appropriate?

The annual coupon payment of a bond divided by its price is called the bond’s:

Supreme, Inc. has 6 percent coupon bonds on the market that have 15 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 7 percent, the current bond price is:          

Given the following information and assuming straight-line depreciation to zero, what is the profitability index for this project? Initial investment = $80,000; life = 5 years; operating cash flow = $25,000 per year; salvage value = $10,000 in year 5; tax rate = 35%; discount rate = 10%.