13 As an auditor, you are asked to verity the financial statements of a corporation. If a company declares that its return on equity is 18 percent, its sales are $4 million, its debt ratio is 0.40 and its total liabilities are $2 million, what should its return on total assets be? Assume the company has no preferred shares

A) 0.80%

B) 1.25%

C) 10.80%

D) 12.60 %

E) There is insufficient information to answer

Answer : 10.80%

9 Your mother has just retired. The balance In her investment account is $600 000 and she wants to receive monthly payments of $5 000. If she receives the payments at the end of the month, and the current interest rate is 7 percent , compounded quarterly, how many months will her investment account last for (round to the nearest month A) -91 months

B) 120 months

C) 170 months

D) 206 MONTHS

E) None of the choices given above

MegaSolt is about to issue new preferred shares. These shares have a par value of $1100, issuing expenses are $200, and the tax rate is 35%. Dividends are expected to be %50, paid every six months. What is the after-tax cost of preferred shares?

A) 6.8%

B)10.3%

C) 10.6%

D) 11.4%

E) none of the above

You are planning to buy a new machine. It is expected to generate annual revenues of $75000 and the annual operating expenses will amount to $15000. The machine is expected to require major upgrades costing $50000 at the end of the 10th and the 15th operating years. At the end of its 20th operating year, a salvage value of $110000 is anticipated. Assuming a rate of 15%, what is the most you should be willing to pay today to purchase the machine?