cooperate financial management

Remaining Time: 1 hour, 52 minutes, 25 seconds. . Question Completion Status This Examination consists of five (5) questions. Students should attempt all questions. Each question is of equal value (10 marks) (Your results should be at least up to 4 decimal places) See attached file for the provided list of formulae: 200488 Corporate Financial Management List of Formulae. drick (a] A six-month call option on 100 shares of ABC Company is selling for $30. The strike price for the option is $4. The share is currently selling at $3.80 per share. () ignoring brokerage fees, what price must the share achieve just to cover the expense of the option? (1 mark) (10) If the share price rises to $4.75 at the time of expiration, what will the net profit on the option contract be? (2 marks) (b) The SWU Company produces a single type of environmentally friendly shopping bag that can be sold at a constant price of $1.50 per bag, Variable cost per bag is $0.90 (regardless of the production volume), and fixed costs amount to $180.000 per year. The firm pays a tax rate of 309%. The company's assets, valued at $625,000, are financed by 40% debt and 60% equaly, with the latter in the form of 20,000 ordinary shares (no preference shares are issued). The firm pays annual interest of 8% on its debt financing. (1) Calculate the annual operating break-even level (volume) of bag sales, (1 mark) (1) Calculate the firm's earnings before interest and taxes (EB/?) and earnings per share (EPS) at annual sales volumes of 350,000, 400,000 and 450,000 bags. (4 marks) (1) Calculate the firm's degree of operating leverage (DOL], degree of financial leverage (DFL) and degree of total leverage (DIZ) at an annual volume of sales of 400.000 bags. (1+0 5-85 .2 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial 14px