17 The asset and liabilities of a corporation are 100M and 20M, respectively There are 10M shares outstanding whose market price is $10 per share EPS for the year is $2 The book ROE for this corporation is and the market ROE is A 25 20 B 15 20 C 20 25 D 20 20 E 25 15 18 Rearden Metal has borrowed $4 million for three months at a stated annual rate of 8 , using inventory stored in a field warehouse as collateral The warehouse charges a $10,000 fee, payable at the end of the month The effect annual rate on this loan is closest to A D 17 1 B B 11 3 C C 15 2 D A 9 3 19 Luther Industries is offered a $1 million dollar loan for four months at an APR of 9 If this loan has an origination fee of 1 , (assume Luther only get $990,000 after the fee) then the effective annual rate (EAR) for this loan is closest to A 12 0 B 13 8 C 4 1 D 12 6 20 A firm with high debt tends to have PE ratio and beta than similar firms (producing similar product) with low debt A higher lower B higher higher C lower higher D lower lower E same higher 21 The price of a 15 coupon bond with 3 years to maturity is when the required return is 13 A 987 B 1047 C 995 D 1078 E 1058 22 Enterprise Value Ratio is a ratio for the A valuation stock only B valuation debt C performance stock only D performance entire firm E valuation entire firm The data below are stats for ABC this year Net Income $10m Sales $200m Dividend $2m Asset $100m Equity $50m Under the constant growth model, the growth rate for ABC is A 16 B 12 C 20 D 4 E 8 24 Which is the right order from the highest to the lowest A Cost of debt WACC cost of equity B WACC cost of equity cost of debt C Cost of equity cost of debt WACC D Cost of equity WACC cost of debt E WACC cost of debt cost of equity 25 Assume the risk free rate is 1 and the expected market return is 12 What is the required return for stock if the stock beta is 1 5 A 15 5 B 17 5 C 12 5 D 14 5 E 10 5

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17. The asset and liabilities of a corporation are 100M and 20M, respectively. There are 10M shares outstanding whose market price is $10 per share.

17. The asset and liabilities of a corporation are 100M and 20M, respectively. There are 10M shares outstanding whose market price is $10 per share. EPS for the year is $2. The book ROE for this corporation is ____ and the market ROE is ____.

A. 25% / 20%
B. 15% / 20%
C. 20% / 25%
D. 20% / 20%
E. 25% / 15%

18. Rearden Metal has borrowed $4 million for three months at a stated annual rate of 8%, using inventory stored in a field warehouse as collateral. The warehouse charges a $10,000 fee, payable at the end of the month. The effect annual rate on this loan is closest to:

A. D. 17.1%
B. B. 11.3%
C. C. 15.2%
D. A. 9.3%

19. Luther Industries is offered a $1 million dollar loan for four months at an APR of 9%. If this loan has an origination fee of 1%, (assume Luther only get $990,000 after the fee) then the effective annual rate (EAR) for this loan is closest to:

A. 12.0%
B. 13.8%
C. 4.1%
D. 12.6%

20. A firm with high debt tends to have ___ PE ratio and ____ beta than similar firms (producing similar product) with low debt.

A. higher; lower
B. higher; higher
C. lower; higher
D. lower; lower
E. same; higher

21. The price of a 15% coupon bond with 3 years to maturity is ______ when the required return is 13%.

A. 987
B. 1047
C. 995
D. 1078
E. 1058

22. Enterprise Value Ratio is a ______ ratio for the _____.

A. valuation; stock only
B. valuation; debt
C. performance; stock only
D. performance; entire firm
E. valuation; entire firm

The data below are stats for ABC this year. Net Income = $10m Sales = $200m Dividend = $2m Asset = $100m Equity = $50m Under the constant growth model, the growth rate for ABC is: