1. You have $2,500 invested in an account that pays 8% annually. How long will it take for your funds to double?

2. Five years ago, a company had earnings per share (EPS) of $1. Its EPS this year is $2.49. What is the annual growth rate in EPS over the 5-year period?

3. A company recently reported it had, in millions, $22 of sales, $16 of operating costs (including depreciation) and $10 of bonds outstanding that carry a 5% interest rate. If the company's federal-plus-state income tax rate is 25%, what is its operating income, or EBIT, in millions?

4. On 12/31/2019, a company reported retained earnings of $500,000 on its balance sheet, and it reported that it had $200,000 of net income during the year. On its previous balance sheet, at 12/31/2018, the company had reported $450,000 of retained earnings. No shares were repurchased during 2019. How much in dividends did the company pay during 2019?

5. A company's sales are, in millions, $300. If sales grow at 6% per year, how large (in millions) will sales be 5 years from now?

6. Suppose you inherited $500,000 and invested it at 8% per year. What is the maximum you can withdraw at the beginning of each of the next 20 years (i.e., your first withdrawal is today and you will make a total of 20 equal withdrawals)?

7. A company faces a 25% corporate tax rate. The company realized $10,000,000 in operating income (i.e., EBIT). Its annual interest expense is $6,000,000. What is the company's net income for the year?

8. A firm has operating income of $200,000 and a 25% tax rate and invested capital of $500,000. What is its return on invested capital?

9. A company's total assets at the end of last year were $500,000 and its EBIT was 60,000. What was its basic earning power (BEP) ratio?

10. You have been offered the opportunity to invest in a project with the following cash flows over the next 30 years: $10,000 a year for the first 10 years (i.e., t = 1 through t = 10) and then $20,000 a year for the remaining 20 years (i.e., t = 11 through t = 30). What is the present value of this project? Assume end of year cash flows and a discount rate of 10% compounded annually.

11. You deposit $1,000 today in a savings account that pays 4% interest, compounded annually. How much will your account be worth at the end of 10 years?

12. A company recently reported it had, in millions, $10,000 of sales, $6,000 of operating costs (including depreciation), $4,000 of outstanding bonds that carry a 5% interest rate, and a federal-plus-state income tax rate of 25%. In order to sustain its operations and thus generate future sales and cash flows, the company was required to make a $1,000 net investment in operating capital. What is the company's free cash flow (in millions)?

13. A company recently reported $150,000 of sales, $80,000 of operating costs (including depreciation). The company has $20,000 of outstanding bonds that carry a 7% interest rate, and its federal-plus-state income tax rate is 25%. How much is the company's net income?

14. You deposit $1,000 into a savings account today earning a nominal rate of 4% compounded daily. How much will you have in your account after 5 years (assume there are 365 days in a year)?

15. Assume that you have an account with a $25,000 current balance (i.e., at t = 0). Further assume that at the end of each year you plan to save and deposit into your account the following amounts: $10,000 a year for the next 5 years (i.e., at t = 1 through t = 5) and $15,000 annually for the following 5 years (i.e., at t = 6 through t = 10). If the account earns 5% compounded annually, how much will you have in your account 10 years from now?

16. Suppose a firm's Total Assets Turnover ratio is 2, its Profit Margin is 12% and its liabilities finance a third of its total assets. If the firm only uses liabilities and common equity to finance its assets, compute the firm's Return on Equity (ROE).

17. You are planning to retire 10 years from today (i.e. 10 years from today is at the end of year 10). Currently, you have $10,000 in a savings account growing at 4% per year (compounded annually) and $100,000 in the stock market growing at 10% per year (compounded annually). You also plan on depositing $5,000 annually into your savings account for the next 10 years (assume end of year deposits with the first deposit at the end of year 1 and the last deposit at the end of year 10). If the interest rate on your savings account stays at 4% (compounded annually) and your stocks continue to grow at 10% (compounded annually), how much will you have in total at the end of 10 years?

18. Suppose you borrow $10,000 at a rate of 5% and must repay it in 5 equal installments at the end of each of the next 5 years. How much will you still owe at the end of the first year, after you make the first payment?

19. Refer to Exhibit 1 below. What is the firm's Return on Equity ratio?

20. Refer to Exhibit 1 below. What is the firm's Fixed Asset Turnover ratio (to two decimal places)?

21. Refer to Exhibit 1 below. What is the firm's Market-to-Book ratio (to two decimal places)?

Exhibit 1

Balance Sheet (Millions of $)

Exhibit 1 Balance Sheet (Millions of S) Assets 2019 Cash and securities $ 3.000 Accounts receivable 12,0 00 Inventories 15.000 Total Current Assets $30,000 Net plant and equipment $20,000 Total Assets $50,000 Liabilities and Equity Accounts payable $7.500 Accruals 5.500 Notes payable 7.000 Total Current Liabilities $20,000 Long-term bonds $15,000 Total Liabilities $35,000 Common stock $ 2,000 Retained carnings 13,000 Total Common Equity $15,000 Total Liabilities and Equity $50,000 Income Statement (Millions of S) 2019 Net sales $90,000 Operating costs except depreciation 82,000 Depreciation 3,000 Earnings before interest and taxes (EBIT) $ 5,000 Less interest 1,000 Earnings before taxes (EBT) $ 4,000 Taxes 1,000 Net Income $ 3,000 Other data: Shares outstanding (millions) 500 Year-end stock price $40