HUNS Channel / P Carson ro MAKE DARKS -ERARE COURT TO CHANGE 1. Ames Agricultural Products, Inc., is an unlevered firm with a market value of S1 million has 50,000 shares outstanding. The firm restructures itself by issuing 200 new par bonds with face value $1.000 and a coupon of 8 %. The firm uses the proceeds to repurchase outstanding stock. In considering the newly levered versus formerly unlevered firm, what is the breakeven EBIT? Ignore taxes. $ 86,400 $ 70,000 $ 65,000 $ 80,000 $ 92,000 2. For the year just ended, Ajax Tours, Inc., had average accounts receivable of $880,000 and total credit sales of $4,800,000. Throughout the year, a factor purchased accounts receivable from the firm at a 3.4% discount. What was the firm's effective interest rate paid on its receivables financing? A) 20.77% B) 19.06% 12.48% 22.81% E) 51.45% 3. The difference between a forward contract and a futures contract is: A) The fact that the futures contract does not obligate the buyer while the forward contract do B) The fact that a forward contract must be paid in full at the onset while the futures contract not. C) The daily resettlement feature found in futures contracts but not in forward contracts. D) The fact that a futures contract is a form of an option contract and a forward contract is E) The fact that the forward contract is marked-to-the-market and the futures contract is no 4. You purchased two July futures contracts on silver when the price quote was 702.2. Gi- today's prices as shown in the table, what is your total profit (loss) to date? Silver--5,000 troy oz.: cnts per troy oz. Open High Low Settle Chg Jul 597.1 613.1 597.0 610.0 13.4 Sep 597.3 614.2 596.9 611.7 13.3 Lifetime High Lifetime Low Open 848.3 434.6 1,259 830.1 475.8 21,2. A B) $-45,675 $-9,220 $-34,000