Question

What is the PV of an ordinary annuity with 10 payments of $4.400 if the appropriate interest rate is 5.5%? a. S33.165.55 b. $34,472.04 C. $34,492.18 d. $34,989.66 e. $38,472.04 Hoagland Corp's stock price at the end of last year was $25.60 per share, and its book value per share was $24.40. What was its market-to-book ratio? a. 1.00 b. 1.05 c. 0.95 d. 1.07 e. 0.97 13. Johnson Office Supplies recently reported $15.500 of sales, $8,250 of operating costs other than depreciation, and $1,750 of depreciation. It had $9,000 of bonds outstanding that carry a 7.0% interest rate, and its federal-plus-state income tax rate was 25%. How much was the firm's earnings before taxes (EBT)? a. $3,799 b. $3,652.50 c. $4,870 d. $5,500 e. None of the above Which of the following statements is CORRET? a. Corporations of all types are subject to the corporate income tax. b. It is easier to transfer one's ownership interest in a corporation than in a partnership c. One of the advantages of the corporate form of organization is that it avoids double taxation. d. One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights, i.e. "one person, one vote.". e. One of the advantages of a proprietorship is that the proprietor is exposed to limited liability. 15 Firm A's sales last year were $510,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times-interest-earned (TIE) ratio? a. 11.80 b. 14.75 c. 9.56 d. 10.50 e. 9.32 Short Anewers (Show all steps to receive full/ partial credit);

Answer 1

Pt 11

PV =P[{1-(1+r)-n}/r]

where P is Periodic payment , r is rate per period, n is number of period

PV=4400[{1-(1+0.055)-10}/0.055

= $33165.55 i.e. Option a

PT 12

Market to book ratio = Market price/ Book value

=25.60/24.40 i.e.1.05 ( Option b)

PT 13

EBT = Sales- operating cost - depreciation -Interest

= 15500-8250-1750-9000*0.07 i.e. $4870 ( Option C)

PT 14

Option B is correct since one can transfer his ownership in the corporation by transferring his share to other person.In case of Partnership share is transfer on the basis of deed.

PT 15

Time Interest earned = Earning before Interest and taxes/Total Interest Expenses

  Earning before Interest and taxes = Sales - Operating cost

=510000-362500 i.e.$147500

Time Interest earned =147500/12500 i.e. 11.80 ( Option a)