4) Miller's Dry Goods is an all-equity firm with 40,000 shares of stock outstanding at a market price of $50 a share. The company's earnings before interest and taxes are $160,000. Miller's has decided to add leverage to its financial operations by issuing $200,000 of debt at 7 percent interest and using the proceeds to repurchase shares of stock. Jen owns 500 shares of Miller's stock and can loan out funds at 7 percent interest. How many shares of Miller's stock must Jen sell to offset the leverage that Miller's is assuming? (Assume Jen loans out all of the funds she receives from the sale of stock. Ignore taxes.) A) 125 shares B) 25 shares C) 50 shares D) 75 shares E) 100 shares 5) Company A can borrow money at a fixed rate of 7.5 percent or a variable rate set at prime plus 1 percent. Company B can borrow money at a variable rate of prime plus .5 percent or a fixed rate of 8 percent. Company A prefers a variable rate and Company B prefers a fixed rate. Which one of the following statements depicts the most favorable outcome of a swap between Companies A and B? A) Company A could pay a fixed rate of 7.75 percent. B) Company B could pay the variable prime rate + 1 percent. C) Company A could pay a fixed rate of 7.25 percent. D) Company A could pay the variable prime rate +.75 percent. E) Company B could pay a fixed rate of 8 percent. 6) Bradley's has an inventory turnover rate of 7.6, a payables turnover rate of 11.4, and a receivables turnover rate of 12.6. How long is the operating cycle? A) 76.99 days B) 24.11 days C) 70.63 days D) 20.20 days E) 30.13 days