XYZ CorpHas 1,000 Shares Outstanding and Retained Earnings of $25,000

question 108

Multiple Choice

XYZ Corp.has 1,000 shares outstanding and retained earnings of $25,000.Theoretically, what would you expect to happen to the price of their stock, currently selling for $30 per share, if a 25% stock dividend is declared?

• A)price should increase to $44.00 per share.
• B)price should increase to $37.50 per share.
• C)price should decrease to $24.00 per share.
• D)nothing; price should remain at $30.00.

Understand the distinction between methods that use present values and those that do not.

Identify and describe various capital investment evaluation methods, including their strengths and weaknesses.

Apply the concept of the time value of money to capital investment analysis.

Calculate the cash payback period for capital investment projects.

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