CF exam

accept project with positive NPV

reject project when IRR is lower than cost of capital (discount rate)

NPV ignores the time value of money

payback period ignores the time value of money

its coupon rate will decrease below 6%

its price will decrease and its YTM will increase above 6%

its par value will decrease

always have securities that are traded on a stock exchange

have more dispersed ownership than closely held companies

are vulnerable to agency problems relatively more than closely held companies

operate only in public sector

always have securities that are traded on a stock exchange,

ave more dispersed ownership than closely held companies, are vulnerable to agency problems relatively more than closely held companies

an increase in profit margin results in an increase in ROE (other things equal)

a decrease in profit margin results in a decrease in ROA (other things equal)

an  increase in equity multiplier results always in an increase in ROE

an increase in total assets turnover results in a decrease in ROE (other things equal)

an increase in profit margin results in an increase in ROE (other things equal), a decrease in profit margin results in a decrease in ROA (other things equal)

to maximize earnings

to maximize the size of the firm

to maximize firm value

€6

€60

€6.6

$22 million

$20 million

$42 million

increases;  a decrease in days sales outstanding

increases;  an increase in payables deferral period

decreases;  a decrease in inventory conversion period

multiply ROE by retention (polwback) ratio

multiply ROE by payout ratio

multiply ROA by expected sales growth rate

True

False

True

False

True

False

True

False

True

False