5) Blasco International has sales of $389,700 and net earnings income of 144,000. The company has 120,000 shares outstanding. What is the price-sales ratio if the stock has a book value of $19.20 per share and a market value per share of $8.60? If the appropriate P/E ratio for the firm is 11.7, what should the price per share be?

6. Hodgkiss Enterprises has gathered projected cash flows for two projects. At what interest rate would the company be indifferent between the two projects? Which project is better if the required return is 10.5 percent? Year Project I Project J 0 -$172,000 -$172,000

1 83,2000 60,000

2 74,400 68,800

3 63,200 76,800

4 57,800 84,000