How is EBIT calculated Total sales Cost of sales Selling, general, and administrative expenses Depreciation and amortization Total sales Cost of sales Selling, general, and administrative expenses Total sales Cost of sales Total sales Cost of sales Interest expense Total sales Cost of sales Interest expense Taxes If the guaranteed interest rate at your bank is 6 , then you should be indifferent between receiving $2,500 in one year which amount below today $2,358 today $2,500 today $2,650 today $2,444 today $2,560 today Assuming the interest rate is 10 per year, what is the present value of an investment that pays you 5 equal payments of $100,000 each year for 5 years, beginning in one year (Pick the answer that is closest) $ 500,000 $ 772,173 $ 349,700 $ 379,079 $ 310,461 What is the Present Value of an investment that will pay you $1,500 every year, forever, starting in one year's time Assume the interest rate is 8 $18,750 $1,500 $15,000 $25,000 $12,000 Assume a perpetuity with a first payment of $500 will grow at a constant rate of 5 forever If the interest rate is 7 , what is the Present Value of this perpetuity $10,000 $25,000 $7,142 86 $4,166 67 $50,000 Which of the following statements is true A fall in bond prices causes interest rates to fall A fall in interest rates causes a fall in bond prices A rise in interest rates causes bond prices to fall Bond prices change independently of interest rates Interest rates change independently of bond prices Smith Plastics plans to pay $0 65 per share in dividends in the coming year If its equity cost of capital is 11 , and dividends are expected to grow by 2 5 per year in the future, what is the value of Smith Plastics stock $24 05 $7 84 $5 91 $7 65 $26 00 A firm has Earnings Before Interest and Taxes (EBIT) of $29 million, interest expense of $4 5 million, and pays taxes of $8 million If the firm has 15 million shares outstanding, what is the firm's earnings per share (EPS) $1 93 $1 10 $1 40 $1 63 $0 91 The book value of equity of a firm is $10 million and the market value of equity is $20 million The face value of debt of the firm is $5 million and the market value of debt is $6 million What is the market value of assets of the firm $26 million $25 million $16 million $15 million $11 million Marner Corp has outstanding corporate debt paying a 10 coupon, with a current yield to maturity of 8 If Marners tax rate is 35 , what is the firm's effective cost of debt 5 2 6 5 10 8 5 85 Preferred stock of Canada Hockey Corp pays a dividend of $4 35 each year and trades at a price of $30 What is the cost of preferred stock capital for Canada Hockey Corp 13 3 14 5 15 5 16 2 16 5 TD Bank expects to pay a dividend of $5 next year and expects these dividends to grow at 7 a year forever The price of TD is $80 per share What is TD's cost of equity capital 6 25 7 00 8 75 12 00 13 25 Your estimate of the market risk premium is 6 The risk free rate of return is 5 and General Motors has a beta of 1 2 What is General Motors' cost of equity capital 12 2 11 8 12 9 11 4 10 8 You have an investment opportunity that will cost $50,000 today and will return $54,000 in one year If interest rates are 4 , what is the NPV of this investment $1,923 $4,000 $2,000 $50,000 $0 Use the information for the 2 questions below Ford Motor Company is considering launching a new line of hybrid diesel electric SUVs The heavy advertising expenses associated with the new SUV launch would generate operating losses of $35 million next year Without the new SUV, Ford expects to earn pretax income of $80 million from operations next year Ford pays a 30 tax rate on its pretax income The amount that Ford Motor Company owes in taxes next year without the launch of the new SUV is closest to $24 0 million $56 0 million $31 5 million $13 5 million $10 5 million The amount that Ford Motor Company owes in taxes next year with the launch of the new SUV is closest to $13 5 million $31 5 million $56 0 million $24 0 million $10 5 million Which of the following is an example of cannibalization A toothpaste manufacturer adds a new line of toothpaste (that contains baking soda) to its product line A grocery store begins selling T shirts featuring the local university's mascot A basketball manufacturer adds basketball hoops to its product line A convenience store begins selling pre paid cell phones A gas station starts selling diesel fuel Suppose you invested $98 in the Ishares High Yield Fund (HYG) a month ago It paid a dividend of $0 47 today and then you sold it for $99 What was your dividend yield and capital gains yield on the investment 0 45 , 1 09 0 48 , 1 02 0 48 , 1 08 1 02 , 1 12 0 75 , 0 98 Amazon com stock prices gave a realized return of 5 , 5 , 10 , and 10 over four successive quarters What is the annual realized return for Amazon com for the year 1 25 2 50 0 00 1 25 1 00 The risk premium is the difference between the average return on a security and the average return for long term Government of Canada bonds a portfolio of securities with similar risk a broad based market portfolio like the S P 500 index Government of Canada treasury bills corporate bonds

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How is EBIT calculated? Total sales - Cost of sales - Selling, general, and administrative expenses - Depreciation and amortization. Total sales - Cost of

How is EBIT calculated?

Total sales - Cost of sales - Selling, general, and administrative expenses - Depreciation and amortization.
Total sales - Cost of sales - Selling, general, and administrative expenses.
Total sales - Cost of sales.
Total sales - Cost of sales - Interest expense.
Total sales - Cost of sales - Interest expense -Taxes.

If the guaranteed interest rate at your bank is 6%, then you should be indifferent between receiving $2,500 in one year which amount below today.

$2,358 today.
$2,500 today.
$2,650 today.
$2,444 today.
$2,560 today.

Assuming the interest rate is 10% per year, what is the present value of an investment that pays you 5 equal payments of $100,000 each year for 5 years, beginning in one year? (Pick the answer that is closest)

$ 500,000
$ 772,173
$ 349,700
$ 379,079
$ 310,461

What is the Present Value of an investment that will pay you $1,500 every year, forever, starting in one year's time? Assume the interest rate is 8%?

$18,750
$1,500
$15,000
$25,000
$12,000

Assume a perpetuity with a first payment of $500 will grow at a constant rate of 5% forever. If the interest rate is 7%, what is the Present Value of this perpetuity?

$10,000
$25,000
$7,142.86
$4,166.67
$50,000

Which of the following statements is true?

A fall in bond prices causes interest rates to fall.
A fall in interest rates causes a fall in bond prices.
A rise in interest rates causes bond prices to fall.
Bond prices change independently of interest rates.
Interest rates change independently of bond prices.

Smith Plastics plans to pay $0.65 per share in dividends in the coming year. If its equity cost of capital is 11%, and dividends are expected to grow by 2.5% per year in the future, what is the value of Smith Plastics stock?

$24.05
$7.84
$5.91
$7.65
$26.00

A firm has Earnings Before Interest and Taxes (EBIT) of $29 million, interest expense of $4.5 million, and pays taxes of $8 million. If the firm has 15 million shares outstanding, what is the firm's earnings per share (EPS)?

$1.93
$1.10
$1.40
$1.63
$0.91

The book value of equity of a firm is $10 million and the market value of equity is $20 million. The face value of debt of the firm is $5 million and the market value of debt is $6 million. What is the market value of assets of the firm?

$26 million
$25 million
$16 million
$15 million
$11 million

Marner Corp. has outstanding corporate debt paying a 10% coupon, with a current yield to maturity of 8%. If Marners tax rate is 35%, what is the firm's effective cost of debt?

5.2%
6.5%
10%
8%
5.85%

Preferred stock of Canada Hockey Corp. pays a dividend of $4.35 each year and trades at a price of $30. What is the cost of preferred stock capital for Canada Hockey Corp.?

13.3%
14.5%
15.5%
16.2%
16.5%

TD Bank expects to pay a dividend of $5 next year and expects these dividends to grow at 7% a year forever. The price of TD is $80 per share. What is TD's cost of equity capital?

6.25%
7.00%
8.75%
12.00%
13.25%

Your estimate of the market risk premium is 6%. The risk-free rate of return is 5% and General Motors has a beta of 1.2. What is General Motors' cost of equity capital?

12.2%
11.8%
12.9%
11.4%
10.8%

You have an investment opportunity that will cost $50,000 today and will return $54,000 in one year. If interest rates are 4%, what is the NPV of this investment?

$1,923
$4,000
$2,000
$50,000
$0

Use the information for the 2 questions below.

Ford Motor Company is considering launching a new line of hybrid diesel-electric SUVs. The heavy advertising expenses associated with the new SUV launch would generate operating losses of $35 million next year. Without the new SUV, Ford expects to earn pretax income of $80 million from operations next year. Ford pays a 30% tax rate on its pretax income.

The amount that Ford Motor Company owes in taxes next year without the launch of the new SUV is closest to:

$24.0 million
$56.0 million
$31.5 million
$13.5 million
$10.5 million

The amount that Ford Motor Company owes in taxes next year with the launch of the new SUV is closest to:

$13.5 million
$31.5 million
$56.0 million
$24.0 million
$10.5 million

Which of the following is an example of cannibalization?

A toothpaste manufacturer adds a new line of toothpaste (that contains baking soda) to its product line.
A grocery store begins selling T-shirts featuring the local university's mascot.
A basketball manufacturer adds basketball hoops to its product line.
A convenience store begins selling pre-paid cell phones.
A gas station starts selling diesel fuel.

Suppose you invested $98 in the Ishares High Yield Fund (HYG) a month ago. It paid a dividend of $0.47 today and then you sold it for $99. What was your dividend yield and capital gains yield on the investment?

0.45%, 1.09%
0.48%, 1.02%
0.48%, 1.08%
1.02%, 1.12%
0.75%, 0.98%

Amazon.com stock prices gave a realized return of 5%, -5%, 10%, and -10% over four successive quarters. What is the annual realized return for Amazon.com for the year?