Question

2. If the current ratio is 2.0 and current liabilities are 100 then inventory is:

1. 200

2. 100

3. 150

4. None of the above

3. If the return on assets is .15 and average assets are 100, the EPS is:

1. 15

2. 115

3. 85

4. Unable to tell from data given

7. Arnold llc has base sales of 100 and rent expense is 12% of sales. Assuming a 15% increase in sales, rent expense for the first pro forma year is:

1. 13.80

2. 14.80

3. 15.80

4. 16.80

11. Morgan llc has base sales of 100 and depreciation expense is 10% of sales. Assuming a 10% increase in sales, depreciation expense for the first pro forma year is:

1. 10

2. 11

3. 12

4. None of the above

24. Gadson acquires digital corporation which is upstream in the marketing chain. this is an example of:

1. Diversification

2. Vertical integration

3. Horizontal integration

4. None of the above

27. Tester corporation has a beta of 2.0. the current t-bill rate is 1% and the stock market's historical return has exceeded the risk-free rate by 8%. the cost of equity for tester is:

1. 16%

2. 17%

3. 18%

4. 19%

28. Balfour corporation has a current stock price of $30. Next year's dividend is projected to be $3.00. The payout ratio is 30% and projected ROE is 10%. the cost of equity is:

1. 16%

2. 17%

3. 18%

4. None of the above

31. The present value of future cash flow per share is $50 for rose corporation. the current earnings-per-share is $5.00. the implied price-earnings ratio is:

1. 5

2. 10

3. 15

4. None of the above

33. The elements needed to calculate cash flow in perpetuity are:

1. Relevant cash flow in last year

2. Target’s cost of equity

3. Both A and B

4. Target’s cost of Debt

35. Control focuses on the:

1. Firms ownership

2. Sequencing of financial alternatives

3. speed associated with obtaining the funds

4. none of the above

39. Tigner corporation is planning a bond issue to finance a new project. Tigner plans to issue 2000 bonds with a face value of $1000 each and a coupon rate of 9%. The tax rate is 40%. Projected EPS after completion of the project is $5.46. What are the projected after-tax earnings after completion of the project if there are 200,000 shares outstanding:

1. $1,092,000

2. $1,100,000

3. $1,110,000

4. None of the above

40. Sturgis corporation is planning an equity issue to finance a new project. Sturgis plans to issue 100,000 shares of stock. Projected after tax earnings after completion of the project are $2,200,000 and shares outstanding will total 200,000. What is the projected EPS after completion of the project:

1. $9

2. $10

3. $11

4. None of the above

Answer 1