Considered to be the best capital budgeting decision tool

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Reference no: EM13941926

a) Which of the following investment evaluation tools is considered to be the best capital budgeting decision tool?

A) Internal Rate of Return

B) Net Present Value

C) Payback Period

D) Modified Internal Rate of Return

b) Gordon’s Bird-in-the-hand” argument suggests that _____.

A) Shareholders are risk averse and attach less risk to current dividends-

B) The market value of a firm is unaffected by dividend policy

C) Firms should have a 100 percent payout policy

D) Dividends are irrelevant

c) According to the residual theory of dividends, if a a firm’s equity need is less than the amount of retained earnings, the firm would _______.

A) borrow to pay the cash dividend

B) Pay dividends higher than the remaining balance to gain credibility

C) Pay no cash dividends

D) Declare a dividend equal to the remaining balance

Reference no: EM13941926

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