8. According to the DuPontidentity, return on equity (ROE) can be expressed as the product of three ratios, which doesNOTinclude

1. Equity multiplier.
2. Total asset turnover.
3. Price-earning ratio.
4. Profit margin.

9.CentauriCorp. has profit margin of 12.5%, total assets of $480 million, total debt of $230 million, and sales of $400 million. The net income is ________ and the ROE is ________. Please refer to Chapter 3, Ex. 2.

1. $50 million; 20.0%.
2. $50 million; 22.5%.
3. $60 million; 22.5%.
4. $60 million; 25.0%.

10.NarnCorp. has a total debt ratio of 0.60. Its debt-equity ratio is ______ and equity multiplier is ______. Please refer to Chapter 3, Ex. 5.

1. 1.25; 2.25
2. 1.50; 2.25
3. 1.50; 2.50
4. 1.60; 2.50
5. 1.60; 2.60

11. Earth Alliance Corp. has a profit margin of 10%, total asset turnover of 1.50, and ROE of 24%, so itsdebt-equity ratioshould be ______. Please refer to Chapter 3, Ex. 8.

1. 0.60
2. 0.80
3. 1.20
4. 1.60
5. 2.00

12.Vree, Inc. has net working capital of $60 million, current liabilities of $40 million, and inventories of $20 million. Its current ratio is ______ and quick ratio is ______. Please refer to Chapter 3, Ex. 1.

1. 1.50 times; 1.00 times.
2. 1.50 times; 2.00 times.
3. 2.50 times; 1.00 times.
4. 2.50 times; 2.00 times.

13.Drazi, Inc.s profit margin is 15%, total asset turnover is 0.8, equity multiplier is 1.25, and dividend payout ratio is 45%.The firm has no plan to raise funds externally, only counting on its own retained earnings to support growth. What maximum growth rate canDraziachieve?This is for internal growth rate. ROA = PM*TAT = 12.0%, b = 1 0.45 = 0.55. Then please refer to Chapter 4, Ex. 12.

1. 5.71%.
2. 7.07%.
3. 7.24%.
4. 8.99%.
5. 13.64%.

14.Abbai, Inc. has the same profit margin, total asset turnover, equity multiplier, and dividend payout ratio as the aforementionedDrazi, Inc. (see Q13).To support its future growth, the firm plans to raise some debt from creditors while keeping its debt-equity ratio unchanged. What maximum growth rate canAbbaiachieve?This is for sustainable growth rate. ROE = PM*TAT *EM= 15.0%, b = 1 0.45 = 0.55. Then please refer to Chapter 4, Ex. 15.

1. 5.71%.
2. 7.07%.
3. 7.24%.
4. 8.99%.
5. 17.65%.

15. You borrow $27,000 student loan. If you pay $563 per month and you are charged 0.5% monthly interest on the balance, how long will it take you to pay off the debt? (PV = 27,000, PMT = -563, RATE = 0.5%, FV = 0, NPER = ?43.10)

1. 43 months.
2. 48 months.
3. 55 months.
4. 58 months.
5. You can never pay off the debt like this.

16. Assume today your child is just 7 years old, and the total cost of a college education will reach $200,000 when your child turns 18 and enters college. You presently have $20,000 to invest. What annual rate of return must you earn on your investment to cover the cost of your childs college education? Please refer to Chapter 5, Ex. 6.

1. 20.28%.
2. 21.28%.
3. 22.28%.
4. 23.28%.
5. 24.28%.

17. Warren Buffet has been earning an annual rate of return of 20.5% since he started his investing company. Assume thatLondoMollariput alump-sum$25,000 under Warren Buffets management since 1970, how much money would he have by Year 2010? Please refer to Chapter 5, Ex. 13. FV = $43,393,221.)

1. below $10,000,000.
2. between $10,000,000 and $20,000,000.
3. between $20,000,000 and $30,000,000.
4. between $30,000,000 and $40,000,000.
5. more than $40,000,000.

18. Another investor SusanIvanovachose to contribute piecemeal, $2,500per yearunder Warren Buffets management since 1970 (see Buffets investment record in Q17), how much would she have by Year 2010? Please refer to Chapter 6, Ex. 7. FV = $21,155,230)

1. below $10,000,000.
2. between $10,000,000 and $20,000,000.
3. between $20,000,000 and $30,000,000.
4. between $30,000,000 and $40,000,000.
5. more than $40,000,000.

19.Vorlon, Inc. has a 15-year bond issued 6 years ago with a coupon rate of 6.75%. The bonds makeannualcoupon payments. If these bonds currently sell for 95.5% of par value, what is the YTM? Please refer to Chapter 7, Ex. 7.

1. 7.25%.
2. 7.45%.
3. 7.65%.
4. 7.85%.
5. 8.05%.

20. Shadow, Inc. issued a 30-year bond 6 years ago with a coupon rate of 6.25% and a face/par value of $1,000. The bonds makesemiannualcoupon payments. If todays YTM on these bonds is 5.50%, what should be the current bond price? Please refer to Chapter 7, Ex. 6.

1. $907.40.
2. $1,098.64.
3. $1,099.28.
4. $1,109.00.
5. $1,109.58.