16. Irvin Corporation has $440,000,000 of common equity, with 10,000,000 shares of common stock outstanding. If the market value added (MVA) is $204,000,000, what is the corporations stock price? *

5 points

$20.40

$23.60

$44.00

$64.40

None of the above

17. Ford Company has the following liabilities at the end of last year: Notes payable of $50,000, accounts payable of $25,000, salaries payable of $9,000, taxes payable of $7,500, bonds payable of $50,000, and long-term loans of $30,000. Besides, the return on total assets (ROA) is 20%, and the debt-to-total-capital ratio is 40%. What is the amount of total assets at the end of last year? *

5 points

$130,000

$195,000

$366,500

$428,750

None of the above

18. The records of Ervin Company in relation to last year show that the company has $12,000,000 of sales, $6,700,000 of operating costs (excluding depreciation), and $1,200,000 of depreciation. The company has $5,800,000 of bonds that carry a 6% interest rate, and its federal-plus-state income tax rate is 35%. During last year, the company has expenditures on fixed assets and net operating working capital that total $1,800,000. These expenditures are necessary for it to sustain operations and generate future sales and cash flows. This year's data are expected to remain unchanged except for one item, depreciation, which is expected to increase by $650,000. The company uses the same depreciation calculations for tax and stockholder reporting purposes. What is the effect of the change in depreciation on the net income and the free cash flow? *

5 points

The net income will decrease by $442,500, and the free cash flow will increase by $227,500.

The net income will decrease by $650,000, and the free cash flow will decrease by $227,500.

The net income will decrease by $1,313,200, and the free cash flow will increase by $2,292,500.

The net income will decrease by $2,016,300, and the free cash flow will decrease by $2,292,500.

None of the above