2. Calculation of Altman's Z-Score: Suppose that the financial ratios of a potential borrowing firm took the following values: X₁ = Net working capital/Total assets = .31, X₂ = Retained earnings/Total assets = 1.7, X₃ = Earnings before interest and taxes/Total assets = .31, X₄ = Market value of equity/Book value of long-term debt = 2.0, X₅ = Sales/Total assets ratio = 2.4. Calculate the Altman's Z-score for this firm

Multiple Choice

• 1.475

• 36.875

• 7.375

• 6.720

3.

Calculation of Average Costs with Economies of Scope Jan's Bakery is considering a merger with Tina's Cookies. Jan's total operating costs of producing services are $450,000 for a sales volume of $3.5 million. Tina's total operating costs of producing services are $90,000 for a sales volume of $750,000. If the two firms merge, calculate the total average cost for the merged firm assuming no synergies. (Round your answer to 2 decimal places.)

Multiple Choice

• 12.71%

• 12.00%

• 12.86%

• 15.43%