Question: 1. You are given the following data for year 1: revenues -$100, Fixed Costs -$40, including Depreciation of $10; total variable costs -$50, tax rate

1. You are given the following data for year 1: revenues -$100, Fixed Costs -$40, including Depreciation of $10; total variable costs -$50, tax rate = 20%. Calculate the after-tax ash flow for the project for year 1.

  1. $17
  2. $13
  3. $7
  4. $10

2. Since monitoring is not perfect, compensation plans should primarily provide managers incentives to:

  1. Focus on work
  2. Work long hours
  3. Take action to make stockholders happy
  4. Maximize shareholder value

3. A firm with very positive prospects to raise new capital, the firm should avoid:

  1. Using retained earning dividends
  2. To not pay cash dividends
  3. New debt
  4. Selling stock

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