7. Which of the following are correct according to pecking-oeder L. Firms stockpile internally-generated cash. IT. There is an inverse relationship between a firm's II. Firms avoid external debe at all costs.l asseine A firm's capital structure is dictated by its need for theory? relationship between a fiem's profa level and its debt level. extermal financing. A. I and III only B. II and IV only C. I., III, and IV only D. I, II, and IV only E. I, II, II1, and IV 8. Old Schools expects an EBIT of $100,000 every yea 10 percent. The firm can borrow percent and ar forever. The firm currently has no debt, and its cost of equity is at 8 percent and the corporate tax rate is 20 percent. What willthe value of the fem be if it converts to 50 percent debt? (50 percent of the levered firm value) A. $888,888.89 B. $1,250,000 D. $680,000.00 E. None of the above. 9. Suppose the Japanese yen exchange rate is *114 -$1, and the United Kingdom pound exchange rate is 1- $1.83. Also suppose the cross-rate is 191-1. What is the arbitrage profit per one U.S. dollar? A. $0.0743 B. $0.0846 C. $0.0857 D. $0.0922 E. $0.0948 10. You own a lot in Florida that is currently unused. Similar lots have recently sold for $1.2 million. Over the past five years, the price of land in the area has increased 10 percent per year, with an annual standard deviation of 25 percent. A buyer has recently approached you and wants an option to buy the land in the next 12 months for $1,300,000. The risk-free rate of interest is 4 percent per year, compounded continuously. How much should you charge for the option? (Round your answer to the nearest $1,000,) A. $52,000 B. $58,000 C. $63,000 D. $72,000 E. $99,000