8 a b d c A firm has a times interest carned ratio of 2.7 times. This means the firm has sufficient EBIT to cover its interest expense 2.7 times the interest expense of this firm exceeded camnings before taxes by 2.7 times. the firm generated enough cash to cover its interest expense 2.7 times the firm camed $1.00 in EBIT for every $2.70 it paid out in interest the net income of this firm is sufficient to cover its interest expense 2.7 times A firm has sales of $500, total assets of $300, and a debt/equity ratio of 2. If its retur on equity is 15%, what is its net income? S50.00 $ 7.50 $32.50 $22.50 SI5.00 9. a b d c 10. You have just made your first $5,000 contribution to your individual retirement account. Assuming you carn a 7% rate of retum and make no additional contributions, what will your account be worth when you retire in 35 years? $17.250.00 S6,128.76 $53,382.90 $46,831.46 b C d 11 Bradley Snapp has deposited $7.000 in a guaranteed investment account with a promised rate of 6% compounded annually. He plans to leave it there for 4 full years when he will make a down payment on a car after graduation. How much of a down payment will he be able to make? $1,960.00 b S2,175.57 $8.960.00 d S8.837.34 $9,175.57 a c 12 A bond is listed in The Wall Street Journal as a 12 3/4s of July 2009. This bond pays a $127.50 in July and January b S63.75 in July and January $127.50 in July d $63.75 in July 13 a b A consol is selling at $1.200 with an interest rate of 5% How much would this bond sell for if the interest rate were 8% instead? $ 200 $ 750 $1.000 $1,650 $1.920 c d C 14. a b The Carnation Chemical Company is investing in an incinerator to dispose of waste The incinerator costs $2.5 million and will generate end-of-year cash of S1 million for the next 3 years. The internal rate of return for this project is 6.4% 8.6% 9.7% 10.4% 12.0% d c