Golden Mining paid a dividend of $3.50 this year, has payout ratio of 40% and return on equity of 15%, and its stock price is $32.50. The cost of equity for Golden is closest to:
A. 19.77%.
B. 20.74%.
C. 17.42%.
Alvaro Manufacturing is analyzing the earnings potential of an expansion into military equipment supplies. The expansion requires a $200,000 initial investment in return for $60,000 annual after-tax cash inflows for consecutive five years. Assume the cost of capital is 10%. Which of the following conclusions regarding the expansion is most likely correct? NPV IRR Decision
A. 227,447.21 16.7% Accept
B. 227,447.21 16.7% Reject
C. 27,447.21 15.24% Accept
A Pharmaceutical Company claims to discover a new approach to diagnose an infant disease.
A. 40%.
B. 80%.
C. 60%.
Which of the following is most likely used to compare a firm’s profitability to the industry average?
A. Balance sheet
B. Income statement
C. Statement of cash flow