1. You just paid $344,000 for a policy that will pay you and your heirs $11,600 a year forever. What rate of return are you earning on this policy?

A 3.26 percent

B 1.86 percent

C 3.16 percent

D 3.62 percent

E 3.37 percent

2. Wagner Industrial Motors, which is currently operating at full capacity, has sales of $2,410, current assets of $750, current liabilities of $440, net fixed assets of $1,600, and a 5 percent profit margin. The firm has no long-term debt and does not plan on acquiring any. The firm does not pay any dividends. Sales are expected to increase by 10 percent next year. If all assets, short-term liabilities, and costs vary directly with sales, how much additional equity financing is required for next year?

A. $241.00

B. $58.45

C. $253.05

D. $12.05

E. $178.95

3. Stop and Go has a 6 percent profit margin and a 45 percent dividend payout ratio. The total asset turnover is 1.75 and the debt-equity ratio is .60. What is the sustainable rate of growth?

A. 8.46 percent

B. 10.18 percent

C. 7.43 percent

D. 6.23 percent

E. 11.90 percent

4. A firm has a retention ratio of 45 percent and a sustainable growth rate of 11.10 percent. The capital intensity ratio is 1.61 and the debt-equity ratio is .80. What is the profit margin?

A. 21.47 percent

B. 12.33 percent

C. 22.20 percent

D. 19.86 percent

E. 13.79 percent