Dividend Policy and Internal Financing 1. Dividend changes may


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Dividend Policy and Internal Financing 1. Dividend changes may be used by management as a credible communication tool to signal investors about future earnings under which of the following dividend policy theories? (Points : 1) the clientele effect the residual dividend theory the information effect the expectations theory 2. The final approval of a dividend payment comes from (Points : 1) the controller. the president of the company. the board of directors. It is a joint decision requiring approval from all of the above. 3. Sweet Tooth Bakery bakes and sells pies. Sweet Tooth has annual fixed costs of $880,000 and a variable cost per pie of $7.50. Each pie sells for $15.50 each. The firm expects to sell 500,000 pies annually. What is the break-even point in sales dollars? (Points : 1) $3,100,000 $2,875,000 $1,705,000 $1,625,000 4. Which of the following will result from a stock repurchase? (Points : 1) Earnings per share will rise. Number of shares will increase. Corporate cash is conserved. Ownership is diluted. 5. Sweet Tooth Bakery bakes and sells pies. Sweet Tooth has annual fixed costs of $880,000 and a variable cost per pie of $7.50. Each pie sells for $15.50 each. The firm expects to sell 500,000 pies annually. What is the break-even point in pies? (Points : 1) 190,440 280,000 200,000 110,000 6. Bob’s Baked Goods Company reported the following income statement for 2009: Sales $2,500,000 Variable Costs 900,000 Fixed Operating Costs 700,000 EBIT 900,000 Interest Expense 200,000 EBT 700,000 Taxes (30%) 210,000 Net Income $490,000 Earnings Per Share $4.90 If Bob’s sales next year increase by 20%, what will Bob’s earnings per share be? (Points : 1) $5.76 $6.45 $7.14 $7.58 7. A high degree of variability in a firm’s earnings before interest and taxes refers to (Points : 1) business risk. financial risk. financial leverage. operating leverage. 8. Based on the data contained in Table A, what is the break-even point in units produced and sold? TABLE A Average selling price per unit $18.00 Variable cost per unit $13.00 Units sold 400,000 Fixed costs $650,000 Interest expense $ 50,000 (Points : 1) 130,000 140,000 150,000 180,000 9. Assume that the tax on dividends and the tax on capital gains is the same. All else equal, what would a prudent investor prefer? (Points : 1) The prudent investor would be indifferent between receiving dividends or capital gains. The prudent investor would prefer dividendsa dollar today is always worth more than a dollar to be received in the future. The prudent investor would prefer capital gainsthe capital gain tax liability can be deferred until gains are realized. More information is needed. 10. Benkart’s Tire Store has fixed costs of $220,000. Tires sell for $95 each and have a unit variable cost of $45. What is Benkart’s break-even point in units? (Points : 1) 4,000 4,400 5,200 5,500 ElderDangerLeopard6369
posted a question · Mar 31, 2013 at 10:48pm

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