1. Mary owns a floral and gift shop valued at $150,000. If she keeps the shop open 5 days a week, EBIT is $75,000. If the shop remains open 6 days a week EBIT increases to $92,000 annually. Mary needs an additional $50,000 which she can raise by either selling stock or issuing debt at an interest rate of 7 percent. Ignore taxes. What will the cash flow for the year be to Mary if she issues stock and remains open 6 days a week? $92,000 $42,000 $69,000 $61,333 $92,000

2. As part of an unexpected news announcement, Alpha Co. stated that it is increasing its annual dividend from $1.04 per share to $1.10 per share. What else must the company have also announced if its stock price and total expected return remained constant following this announcement? Assume none of the announcement information was previously expected by the market. The firms rate of growth will be less than previously anticipated.; The firm is planning a new period of rapid growth.; The firm will continue to pays it dividend on an annual basis.;The firms ongoing operations are on track to meet prior expectations.;The firms dividend payout ratio has been, is, and will continue to be constant.

3. A stock was priced at $23.08, $24.15, $23.99, and $24.26 at end of Years 1 to 4, respectively, The annual dividend is constant at $.20 a share. What is the geometric average return on this stock?3.31% 2.52% 3.27% 2.56% 2.48%

4. One year ago, you purchased a stock at a price of $32.50. The stock pays quarterly dividends of $.40 per share. Today, the stock is worth $34.60 per share. What is the total dollar return per share to date from this investment? $2.50 $3.70 $3.70 $2.10 $3.40

5. Which one of the following is true? Rational firms raise debt levels when profits are expected to decline.; Rational investors are likely to infer a firm is more valuable when its debt level declines.; Investors will generally view an increase in debt as a positive sign for the firm's value.; A successful firm will probably be all-equity financed.; A firm with low anticipated profits will likely take on a high level of debt.

6. The pecking order states that firms should: issue debt first.; always issue equity to avoid financial distress costs.; issue new equity first.; use internal financing first.; always issue debt then the market won't know when management thinks the security is overvalued.

7. An investment is available that pays a tax-free 6 percent. If the corporate tax rate is 30 percent, and you ignore risk, what would you expect the pretax return on taxable bonds to be? 6.00% 4.20% 7.67% 8.57% 1.80%

8. One year ago, you purchased a stock at a price of $32 a share. Today, you sold the stock and realized a total return of 14.62 percent. Your capital gain was $3.48 a share. What was your dividend yield on this stock? 3.75% 4.35% 3.35% 2.25% 2.85%

9. BCD shares are currently selling for $27.38 each. You bought 200 shares one year ago at $26.59 and received dividend payments of $1.27 per share. What was your percentage capital gain for the year? 3.21% 2.97% 7.75% -2.89% 7.52%

10. A year ago, you purchased 500 shares of New Tech stock at a price of $49.03 per share. The stock pays an annual dividend of $.10 per share. Today, you sold all of your shares for $58.14 per share. What is your total dollar return on this investment? $4,853 $4,733 $4,605 $4,755 $4,753