Which one of the following best states the primary goal of financial management?
A. maximize current dividends per share
B. maximize the current value per share
C. increase cash flow and avoid financial distress
D. minimize operational costs while maximizing firm efficiency
E. maintain steady growth while increasing current profits
A project has an initial cost of $18,400 and produces cash inflows of $7,200, $8,900,
and $7,500 over three years, respectively. What is the discounted payback period if the
required rate of return is 16 percent?
A. 2.31 years
B. 2.45 years
C. 2.55 years
D. 2.62 years
E. never
Penn Corp. is analyzing the possible acquisition of Teller Company. Both firms have no
debt. Penn believes the acquisition will increase its total aftertax annual cash flows by
$3.7 million indefinitely. The current market value of Teller is $103 million, and that of
Penn is $151.7 million. The appropriate discount rate for the incremental cash flows is 9
percent. Penn is trying to decide whether it should offer 44 percent of its stock of $133
million in cash to Teller's shareholders. The cost of the cash alternative is _____, while
the cost of the stock alternative is _____.
A. $103,000,000; $130,156,889
B. $103,000,000; $133,000,000
C. $133,000,000; $103,000,000
D. $133,000,000; $130,156,889
E. $236,000,000; $103,000,000