A company has sales of $80,000, costs of $48,000, depreciation of $20,000, and a 34% tax rate. Which one of the following is the correct method of computing the operating cash flow using the tax shield approach?

a. ($80,000 - $48,000)(1 - .34) + ($20,000)(.34)

b. $80,000 - $48,000 - ($80,000 - $48,000 - $20,000)(.35)

c. ($80,000 - $48,000 - $20,000) - ($80,000 - $48,000 - $20,000)(1 - .35)

d. ($80,000 - $48,000)(.34) + ($20,000)(1 - .34)

e. ($80,000 - $48,000 - $20,000) - ($80,000 - $48,000 - $20,000)(.35)

Youre buying a $25,000 car but you can only afford the down-payment of $5,000. Therefore you take a $20,000 auto loan. The terms of the loan call for monthly payments for 5 years at an 8.6% annual interest rate. What is the amount of monthly payment?

a. 296.67

b. 301.12

c. 287.71

d. 342.76

e. 366.05

f. 411.30

Calculate your companys ROE based on the following information:

Asset turnover ratio= 1.25

Profit margin= 5%

Current ratio = 1.2

Debt-to- equity ratio = 2

What is your companys ROE?

a. 13.75%

b. 12.50%

c. 7.50%

d. 8.7%

e. Insufficient information to find ROE

f. 18.75%

A company has a stock beta of 1.20. The expected market return is 10%, and risk-free rate is 2%. The company's next dividend is expected to be $2 per share, and dividends have been growing at a 4% annual rate. The stock is currently trading at $25 per share. If you invest in the stock now, what's the best estimate of your return?

a. 12.32%

b. 12%

c. 13.09%

e. 8.86%

f. 14%

g. 11.60%

A project will increase the sales of your company by $50,000 and increase its expenses by $36,000. The project will cost $30,000 and be depreciated using straight-line depreciation to a zero book value over the 3-year life of the project. The company has a corporate tax rate of 30%. What is the annual operating cash flow of the project using the tax shield approach?

a. $12,800

b. $9,100

c. $17,500

d. $15,600

e. $8,400

f. $12,600