The preemptive right is important to shareholders because it

a.

The preemptive right is important to bondholders but not to shareholders

b.

Allows management to sell additional shares below the current market price.

c.

Will result in higher dividends per share.

d.

Is included in every corporate charter.

e.

Protects the current shareholders against dilution of ownership interests.

Consider the following information for MADA corporation, last years sales $100,000. Last years earnings $5,000. Dividends paid $2000. Current assets $50,000, fixed assets $50,000. Current liabilities $20,000. Equity $80,000. The maximum growth rate that the firm can sustain without external financing or changing it financing investment or dividends policy?

a.

3.5%

b.

3.9%

c.

4.9%

d.

9.3%

The value of a firm is maximized when the:

a.

Tax rate is zero.

b.

Levered cost of capital is maximized.

c.

Debt-equity ratio is minimized

d.

Weighted average cost of capital is minimized.

e.

Cost of equity is maximized.

What is the key aim when maximizing shareholder wealth?

a.

To maximize the flow of discounted cash flow over a short time period.

b.

To maximize the size of dividends over a short time period.

c.

To maximize the flow of discounted cash flow over a long time period.

d.

To minimize the flow of cash in the forms of dividends over a long time period.