1. Which of the following is the most valid reason to split a stock that has a market price of $110 per share? (Points : 1) Conserve cash. Reduce the market price to a more popular trading range. Obtain additional capital. Increase investor's net worth. 3. The Modigliani and Miller hypothesis does not work in the "real world" because (Points : 1) interest expense is tax deductible, providing an advantage to debt financing. higher levels of debt increase the likelihood of bankruptcy, and bankruptcy has real costs for any corporation. both A and B. dividend payments are fixed and tax deductible for the corporation. 4. Assume that the tax on dividends and the tax on capital gains is the same. All else equal, what would a prudent investor prefer? (Points : 1) The prudent investor would be indifferent between receiving dividends or capital gains. The prudent investor would prefer dividendsa dollar today is always worth more than a dollar to be received in the future. The prudent investor would prefer capital gainsthe capital gain tax liability can be deferred until gains are realized. More information is needed. 5. Benkart's Tire Store has fixed costs of $220,000. Tires sell for $95 each and have a unit variable cost of $45. What is Benkart's break-even point in units? (Points : 1) 4,000 4,400 5,200 5,500 8. Moline Manufacturing Corporation reported the following items: Sales = $6,000,000; Variable Costs of Production = $1,500,000; Variable Selling and Administrative Expenses = $550,000; Fixed Costs = $1,350,000; EBIT = $2,600,000; and the Marginal Tax Rate =35%. Moline's break-even point in sales dollars is (Points : 1) $2,050,633. $2,197,500. $2,438,750. $2,785,000. 9. Sweet Tooth Bakery bakes and sells pies. Sweet Tooth has annual fixed costs of $880,000 and a variable cost per pie of $7.50. Each pie sells for $15.50 each. The firm expects to sell 500,000 pies annually. What is the break-even point in sales dollars? (Points : 1) $3,100,000 $2,875,000 $1,705,000 $1,625,000 10. If a firm has no operating leverage and no financial leverage, then a 10% increase in sales will have what effect on EPS? (Points : 1) EPS will remain the same EPS will increase by 10% EPS will decrease by 10% EPS will increase by less than 10%