17. Under plan 1 there are 20,000 shares outstanding and no debt. Under plan 2 there are 15,000 shares outstanding and a debt issue of $500,000 with r 10%, what is break even EBIT? a) 200,00o b) 300,000 c) 400,000 d) 500,000 18. The WACC for a firm holding no debt is 12% (Ru); the company can borrow at 8%. If the company converts to a debt/equity ratio of 1, what will be the cost of equity when debt is added in the company? lgnore taxes. a)8% b) 12% c) 14% d) 16% 19. The value of company X without debt (Vu) is $5,000,000. If the company decides to issue debt of $2,000,000 and the corporate tax rate is 30%, what is the value of company with debt(Vi)? a) 5,000,000 b) 5,200,000 c) 5,600,000 d) 7,000,000 20. Currently in Adidas AG there are 200,000 shares and the price per share is $50. If company declares a 4/5 reverse stock split, how will these values change? a) Nr shares: 160,000; Price: $40 b) Nr shares: 160,000; Price: $62.5 c) Nr shares: 250,000; Price: $40 d) Nr shares: 250,000; Price: $62,5 21. The equity value in AT&T Incorporation is currently $500,000 and there are 20,000 shares. If company declares a 20% stock dividend what will be the new price of this company? a) New price $15 b) New price $20 c) New price $20.83 d) New Price $22.83 22. The current price per share of company x is $95 per share. If tomorrow is the ex-dividend date and the company has declared a dividend payment of $4, how much will be the price tomorrow? a) $91 b) $92 c) $95 d) $99 23. Equity X has an expected return of 16%, A risk-free asset currenty earns 6%, what is the expected return on a portfolio that is equally invested in the two assets? a) 9% b) 11% c)12% d) 13% 24. Equity X has beta of 1.5. If you invest in Equity x & in a Risk Free Asset, what is the portfolio beta, given the weights of these two assets are same? a) 0.55 b) 0.7 c) 0.75 0.8 25. If E(Rx)-13%, RFR = 5% and : 1.5, what is the slope of the SLM a) 3.33 4.33 c) 5.33 d) 6.33