Which of the following statements is FALSE?Question 7Answera.We must discount the cash flows from stock based on the equity cost of capital for the stock.b.The capital gain is the difference between the expected sale price and the purchase price of the stock.c.We divide the capital gain by the expected future stock price to calculate the capital gain yield.d.The firm might pay out cash to its shareholders in the form of a dividend.

Which of the following statements is FALSE? O a. The capital gain is the difference between the expected sale price and the purchase price of the stock. O b. Future dividend payments and stock prices are not known with certainty, rather these values are based on the investor'sexpectations at the time the stock is purchased. O c. We divide the capital gain by the expected future stock price to calculate the capital gain yieldO d. The sum of the dividend yield and the capital gain yield is called the total return of the stock

4. Which of the following statements is FALSE?Video: 6.D. P26-33 (Other considerations)Group of answer choicesD After adjusting for investor taxes, there remains a substantial tax advantage for the firm to retain excess cash.C) In perfect capital markets, if a firm invests excess cash flows in financial securities, the firm’s choice of payout versus retention is irrelevant and does not affect the initial share price.A) A firm must balance the tax costs of holding cash with the potential benefits of financial flexibility to profit from future growth opportunities.B) Paying out excess cash through dividends or share repurchases can boost the stock price by reducing managers’ ability and temptation to waste resources.

Which of the following statements is FALSE? O a. The simplest forecast for the firm's future dividends states that they will growat a constant rate; i.e., forever. O b. We must discount the cash flows from stock based on the equity cost ofcapital for the stock. O c. The firm might pay out cash to its shareholders in the form of a dividend.O d. The dividend yield is the expected annual dividend of a stock, divided by itsexpected future sale price.

Which of the following statements is FALSE?Video: 6.C. P17-25 (Payout policy with taxes)Group of answer choicesA) Unlike with capital structure, taxes are not an important market imperfection that influence a firm's decision to pay dividends or repurchase shares.D) The optimal dividend policy when the dividend tax rate exceeds the capital gains tax rate is to pay no dividends at all.C) When the tax rate on dividends exceeds the tax rate on capital gains, shareholders will pay lower taxes if a firm uses share repurchases for all payouts rather than dividendsB) If dividends are taxed at a higher rate than capital gains, shareholders will prefer share repurchases to dividends.

Which of the following statements is FALSE?Group of answer choicesAs a practical matter, to derive the forecasted cash flows of a project, financial managers often begin by forecasting earnings.When evaluating a capital budgeting decision, we generally include interest expense.The decision to continue or abandon a project should be based only on the incremental costs and benefits of the project going forward.Earnings are not cash flows.