11. LSP is going to invest $1,000,000 in assets to start its new project, and it expects to have a BEP ratio of 20%. LSP plans to have no securities, so all of its income will be operating income. Therefore, LSP can finance up to 50% of its assets with debt, which will have an 8% interest rate. Assuming a 40% tax rate, what is the difference between LSPs expected ROE if it finances with 50% debt versus its expected ROE if it finances its project purely with common stock? *

a.19.2%

b.12.2%

c.8%

d.7.2%

e.None of the above

12. Semena Co.. has a profit margin of 6.80 percent, total asset turnover of 1.95, and ROE of 18.27 percent. What is this firms debtequity ratio? *

a.20%

b.50%

c.83%

d.38%

e.None of the above

13. TSE co. has current liabilities of $365,000, a quick ratio of 0.85, inventory turnover of 5.8, and a current ratio of 1.4. What is the sales level for the company? *

a.$1,164,350

b.$2,187,330

c.$1,111,396

d.$0

e.None of the above