All else equal, the market value of a stock will tend to decrease by roughly the aftertax
value of the dividend on the:
A. dividend declaration date.
B. ex-dividend date.
C. date of record.
D. date of payment.
E. day after the date of payment.
The purchase accounting method requires that:
A. the excess of the purchase price over the fair market value of the target firm be
recorded as a one-time expense on the income statement of the acquiring firm.
B. goodwill be amortized on a yearly basis for financial statement purposes.
C. the equity of the acquiring firm be reduced by the excess of the purchase price over
the fair market value of the target firm.
D. the assets of the target firm be recorded at their fair market value on the balance
sheet of the acquiring firm.
E. the excess amount paid for the target firm be recorded as a tangible asset on the
books of the acquiring firm.
Sheakley Industries is considering expanding its current line of business and has
developed the following expected cash flows for the project. Should this project be
accepted based on the discounting approach to the modified internal rate of return if the
discount rate is 13.4 percent? Why or why not?
A. Yes; The MIRR is 6.50 percent.