1 a firm is all equity financed with 10000 outstanding, Ask an Expert

Finance

1. A firm is all equity financed, with 10,000 outstanding shares with a market value of $20 each. Its net income was $30,000, and it decides to pay a cash dividend of $2,000. Calculate the value of each share after the dividend payout.

A $22.8

B $20.0

C $19.8

D Not enough information

2. The owners of a firm facing a high probability of bankruptcy prefer to invest in ____ projects, because ______.

A safer; riskier projects make bankruptcy more likely

B no new; the firm is likely to go bankrupt anyway

C risky; the shareholders have little to lose and might win if successful

D risky; creditors prefer taking a gamble rather than having the company default

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93041565

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