You Are Considering Two Independent Projects with the Following Cash

question 80

Multiple Choice

You are considering two independent projects with the following cash flows. The required return for both projects is 12 %. You should accept:

• A) Project A only.
• B) Project B only.
• C) Both projects.
• D) Neither project.
• E) Whichever project you prefer as their values are equal today.

Understand the ex-dividend date and its relevance in the context of stock transactions.

Understand the concept of the price/earnings ratio and its alteration due to corporate actions like dividends and stock repurchases.

Identify the various factors that influence a company’s dividend policy and shareholder satisfaction.

Analyze the effects of specific corporate financial decisions on market perceptions and shareholder value.

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Definitions:

Disaffirm

Disaffirm refers to the legal act of renouncing or nullifying a contract or agreement, especially employed when one party to the agreement is not capable of fully understanding their obligations due to age or mental state.

Good Faith

Acting with honesty, fairness, and without deceit or fraud in transactions or interactions.

Emancipated

Refers to a legal process through which a minor gains legal independence from their parents or guardians before reaching adulthood.

Disaffirmance

The legal act of rejecting or voiding a contract or agreement, especially by one party who was a minor at the time of entering the contract.