1. The optimal dividend distribution policy depends upon:

	1.	target payout ratio
	2.	target distribution policy
	3.	low distribution ratio
	4.	all the above

2. A firm has no debt outstanding, and its financial position is given by:

expected EBIT: $600,000

cost of equity: 10%

growth rate in EBIT 0%

shares outstanding 200,000

tax rate T 25%

What is the firm's intrinsic value of operations? What is its intrinsic stock price? What is its earnings per share?

	1.	5,000,000, $22.00, $2.50
	2.	4.000.000, $23.0, $2.00
	3.	4,250,000, $22.00, $2.50
	4.	4,500,000, $22.50. $2.25
	5.	none of the ansers are correct

5. Below are the expected after-tax cash flows for Projects Y and Z. Both projects have an initial cash outlay of $20,000 and a required rate of return of 17%.

	Project Y	Project Z
Year 1	$12,000	$10,000
Year 2	$8,000	$10,000
Year 3	$6,000	0
Year 4	$2,000	0
Year 5	$2,000	0

Project Y's IRR is:

	1.	12.51%
	2.	less than zero.
	3.	22.51%.
	4.	less than 17%.

8. Which statement is correct regarding stock repurchases:

	1.	Repurchases have a tax advantage over dividends as a way to distribute dividend income to stockholders
	2.	Repurchaes are more effective that cash dividends in order to maintain a stable capital structure.
	3.	repurchase announcements are normally viewed as nagative market signals because of the high proce of repurchasing stock.
	4.	all the answers are correct.