34. Your firm has a line of credit with your local bank for $50,000. The loan agreement calls for interest of 10% with a 10% compensating balance requirement which is based on the total amount borrowed. What is the effective interest rate if you need $42,750 for one year to cover your operating expenses? * (1 Point) 8.55% 9.00% 11.1196 10.5296 Epsilon has 2,000 bonds outstanding with a face value of $1,000 each and a coupon rate of 10%. The interest is paid semi-annually. What is the amount of the annual interest tax shield if the tax rate is 25%?* (1 Point) $58,500 $60,100 $50,000 561,200 Your firm has sales of $628,000 and cost of goods sold of $350,000. At the beginning of the year, your inventory was $31,000. At the end of the year, the inventory balance was $33,000. What is the inventory turnover rate? * (1 Point) 11.23 times 12.56 times 18.60 times 10.94 times The Sar Co. has an unlevered cost of capital of 11%, a cost of debt of 8%, and a tax rate of 30%. What is the target debt-equity ratio if the targeted cost of equity is, 12%?* (1 Point) 0.444 0.476 0.510 26. Gamma has a cost of equity of 14.5% and a pre-tax cost of debt of 7%. The required return on the assets is 11%. What is the firm's debt-equity ratio based on MM Proposition II with no taxes? (1 Point) 0.875 0.640 0.722 0.755 25. The Alpha Corporation has a WACC of 16 percent. Its cost of debt is 13 percent. If Alpha's debt- equity ratio is 2, then the cost of its equity capital is:( Ignore taxes in your answer). (1 Point) 26% 22% 18% 3296 23. Zaxs expects an EBIT of $10,000 every year forever. Zaxs can borrow at 7 percent. Suppose Zaxs currently has no debt and its cost of equity is 17 percent. If the corporate tax rate is 35 percent, if Zaxs borrows $15,000 and uses the proceeds to repurchase stock, the value of the firm will be: (1 Point) 40250 34200 43485 32140 22. ABC, Inc. has a beginning receivables balance on January 1st of $430. Sales for January through April are $240, $250, $330 and $350, respectively. The accounts receivable period is 60 days. How much did the firm collect in the month of April? Assume that a year has 360 days. (1 Point) Ek $240 $250 $330 $350 17. The Winter Wear Company has expected earnings before interest and taxes of $2,100, an unlevered cost of capital of 14% and a tax rate of 30%. The company also has $2,800 of debt that carries a 7% coupon. The debt is selling at par value. What is the value of this firm? * (1 Point) $9.900 $10,852 $11,340 $12.054 the firm should: 16. Pluto, Inc. has a beginning cash balance of $430 on February 1st. The firm has projected sales of $600 in January, $800 in February and $900 in March. The cost of goods sold is equal to 50% of sales. Goods are purchased one month prior to the month of sale. The accounts payable period is 30 days and the accounts receivable period is 15 days. The firm has monthly cash expenses of $180. What is the projected ending cash balance at the end of February? Assume that every month has 30 days. (1 Point) $150 $390 $450 $550