1. You are given the information of firm A and B for their performance evaluation. Firm A B Sales 60 55 EAT 20 18 Total Assets 75 72 Stockholder's Equity 40 40 Suppose the industry average of net profit margin ratio, total asset turnover and equity multiplier is around 30%, 0.78 times and 1.9 respectively. Which of the following is true? options:

-Firm B shall restructure its capital structure to achieve a lower financial leverage since it appears to be higher than the industry average.

-Firm A shall restructure its capital structure to achieve a lower financial leverage since it appears to be higher than the industry average.

-Firm B shall improve its total asset turnover ratio since it is lower than the industry average and thus indicates an inefficient utilization of assets.

-Firm A shall improve its total asset turnover ratio since it is higher than the industry average and thus indicates an inefficient utilization of assets.

2. Kathleen just won a $620,000,000 lottery in Florida. Instead of receiving a lump sum, she found that she would receive $24,800,000 annually (end of year) for 25 years. Kathleen is 65 years old and wants her money now. She has been offered $258,500,000 to sell her ticket. What rate of return is the buyer expecting to make if Kathleen accepts the offer?

-13.50%

-9.31%

-8.28%

-10.85%