1.Grandma's Applesauce, Inc. has a 0.60 probability of a good year with operating cash flow of $50,000; and 0.40 probability of a bad year with operating cash flow of $30,000. The company has a debt of $35,000 with 8 percent interest due next year. Assuming the company has no means of servicing its debt other than operations, and a 0% tax rate, which of the following is true? Shareholders expected claim is $12,200 Creditors expected claim is $37,800 Creditors expected claim is $34,680 None of the above 2.The Pecking Order Theory of capital structure rests on an assumption of Agency costs Barriers to entry Asymmetric information Tax shields and cost of financial distress 3.Which of the following ratios appears on a common-size balance sheet? I. Debt to asset ratio II. Net working capital to total assets III. Net profit margin I , II, III I only I and III III only