A Firm That Chooses Strategy C, as Portrayed in Chapter

question 19

Multiple Choice

A firm that chooses Strategy C, as portrayed in Chapter 29, should plan to

• A)have a permanent need for short-term borrowing.
• B)have high current cash holdings.
• C)use low or no short-term debt and more long-term financing.
• D)increase its dividend soon.

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Definitions:

NPV Method

The Net Present Value method, a way to evaluate investments by calculating the present value of all cash flows associated with the investment, minus the initial investment cost.

Mutually Exclusive

Situations or options where the choice of one excludes the ability to choose any of the other options.

After-tax Cash Flows

After-tax cash flows are the net cash flows a company generates after accounting for taxes.

Salvage Value

Salvage value is the estimated resale value of an asset at the end of its useful life.