Reference no: EM132396101

1. If you were the CEO of a company for a day, what dividend policy would you implement? Justify and defend your policy with evidence and sound reasoning. Your answer should be in your own words.

2. In your own words, describe the four primary methods for assessing the viability of capital projects.

3. If you were to choose a method or combination of methods to assess the viability of a capital project, what method(s) would you chose and why? Your answer should be in your own words.

4. What are the three elements of the Weighted Average Cost of Capital formula? Which of the elements are impacted by taxes? Your answer should be in your own words.

5. Which capital evaluation methods take into consideration the time value of money? What is the time value of money an important element of the capital budgeting process? Your response should be in your own words.

6. When using the Internal Rate of Return method to assess capital projects, what is a common pitfall that might occur if an organization consistently chooses projects with the highest IRR? Your response should be in your own words.

7. What is sensitivity analysis and what role does it play in the capital budgeting process? Your answer should be in your own words.

8. If you had started your own business and were contemplating expansion, would you choose to finance your expansion with debt or equity? Justify and defend your choice with sound reasoning. Your answer should be in your own words.

9. What estimates are involved in the Weighted Average Cost of Capital formula? Do you feel these estimates are reliable or do they invalidate the use of this measure? Explain your reasoning in your own words.

10. Explain the basic premise of the Signaling Hypothesis. How does this impact the dividend policy implemented by the firm? Your response must be in your own words.