FIN 571 TUTOR Let's Do This /fin571tutor.com FIN 571 TUTOR Let's Do This /fin571tutor.com | Page 40

capital budgeting.
3.For a firm to create value it must:
avoid the issuance of debt securities.
have a greater cash inflow from its stockholders than its outflow to them.
avoid payments to the government so dividends can be increased.
3.(Set 2)
A stakeholder is any person or entity:
owning shares of stock of a corporation.
to whom the firm currently owes money.
that initially started a firm and currently has management control over that
firm.
owning bonds or other long-term debt issued by a corporation.
other than a stockholder or creditor who potentially has a financial interest
in the firm.
4.If a firm is currently profitable, then:
its cash flows are known with certainty.
its reported sales exceed its costs.
the timing of the cash flows on proposed projects is irrelevant.
it will always have sufficient cash to pay its bills in a timely manner.