Q1 We should report Dividends as:-

Select one: a. financing activity-inflow b. financing activity- outflow c. investment activity-outflow

Q2 Abey, Inc. owns 5% of the common stock in the Sea Company. Abey received $100,000 in dividends during 2007 on its investment in Sea. What amount will Abey include in taxable income, and what amount will Sea deduct, respectively?

Select one: a. $30,000; $100,000 b. $100,000; $100,000 c. $30,000; $0 d. $100,000; $0

Q3 A corporation has an average tax rate of 25% and a marginal tax rate of 39%. The corporation can invest in a tax-free project with an expected before-tax return of 6.8% or in a taxable project with an expected before-tax return of 10%. The corporation should ________.

Select one: a. Invest in the taxable project because the return is greater b. Be indifferent between the two investments because the after-tax returns are the same. c. Invest in the taxable project because the after-tax return is greater d. Invest in the tax-free project because the after-tax return is greater