1. How would you choose between dividends and stock repurchases as a CFO? What considerations might affect your decision?
2. What do you think would be the impact of dividend tax on cost of equity?
You are considering making a movie. The movie is expected to cost $10 million up front and take a year to make. After that, it is expected to make $5 million in the year it is released and $2 million for the following four years.
What is the payback period of this investment?
If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10%?