1. Your firm expects to incur a ($500K) loss in year 1 and make $100K of net income in year 2 and $300K of net income in year 3. The retention ratio is projected to be 100%. The beginning equity balance on the balance sheet at the beginning of year 1 is $600K. Assuming you sell an additional $500K of stock in year 2, the equity balance at the end of year 3 would be expected to be __________.

a. $100K

b. $1,000K

c. $700K

d. $500K

2. Pet Delight specializes in gourmet pet treats. Sales estimates in millions for the next two quarters are $500 for 1Q and $600 for 2Q. All sales are made on credit. The company's beginning accounts receivable balance is $250. The company's Days in Receivables is 30 days. Cash collections from Accounts Receivables in 1Q would be estimated to be:

a. $417

b. $250

c. $750

d. $583

e. $167

3. Continuing from above, Pet Delight has a Payables period of 45 days. Purchases are expected to be 50% of next quarter's sales. The company's beginning Accounts Payable balance is $125. Using sales data from problem 2, disbursements during 1Q would be estimated to be:

a. $275

b. $425

c. $725

d. $325

e. $583

4. Using the Capital Asset Pricing Model, estimate the cost of equity for the following company. Assume rate on unsecured corporate bonds is 7%, the rate on Treasury Bills is 3%, the expected return for the overall market is 10%, and the company's beta is 2.0. The cost of equity for this company would be ________.

a. 9.0%

b. 17.0%

c. 20.0%

d. 23.0%

5. Financing provided in sequences of rounds rather than all at one time is known as?

a. crowdfunding

b. venture debt financing

c. staged financing

d. the capitalization rate

6. Calculate the after-tax WACC based on the following information: nominal interest rate on debt = 10%; cost of common equity = 20%; common equity = $600,000; interest-bearing debt = $400,000; and a tax rate = 30%.

a. 18.0%

b. 12.2%

c. 14.8%

d. 23.8%