Which of the Following Statements Is (Are)true

question 98

Multiple Choice

Which of the following statements is (are) true?

• A) Small,rapidly-growing firms usually have excess cash and are likely to pay cash dividends.
• B) Managers of firms with free cash flow should retain the cash and invest in new projects,regardless of the projects' NPVs,as the transaction costs associated with paying dividends is too costly.
• C) Managers of firms with free cash flow should begin to pay dividends to ensure that they will not invest the free cash flow in negative-NPV projects.
• D) All of the above statements are false.

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Definitions:

Mathematical Expression

A combination of numbers, symbols, and operators (such as +, -, *, /) that represents a quantitative relationship or value.

Present Value Calculation

A formula used to determine the current value of a sum of money to be received in the future, accounting for a specific interest rate.

Exponentiation

A mathematical operation involving the raising of one number to the power of another.

Variable Substitution

In mathematics, this involves replacing variables with other variables or values to simplify expressions or solve equations.