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m Practice Test without answers.docx Download ir Page of 140 - ZOOM + e. $33.43 7. Frederickson Office Supplies recently reported $12,500 of sales, $7,250 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges and no non-operating income. It had $8,000 of bonds outstanding that carry a 7.5% interest rate, and its federal-plus-state income tax rate was 40%. How much was the firm's taxable income, or earnings before taxes (EBT)? Practice Test Page 3 of 14 a. $3,230.00 PIN DUUU ulei LAJM sullene flemming Name Identify the choice that best completes the statement or answers the question. Show all of your work. Write notes/comments on the conceptual questions, and display calculations on the computational problems, to obtain partial credit. Communication with others by any method (e.g., electronic, voice, paper) is not allowed. Use of the web is not allowed except for obtaining your textbook, your notes, and your smart phone calculator. 1. Last year Urbana Corp. had $197,500 of assets, $307,500 of sales, $19,575 of net income, and a debt-to- total-assets ratio of 37.5%. The new CFO believes a new computer program will enable it to reduce costs and thus raise net income to $33,000. Assets, sales, and the debt ratio would not be affected. By how much would the cost reduction improve the ROE? (C-3) a. 9.32% b. 9.82% C. 10.33% g e their prices should d. 10.88%d e. 11.42% Dices 2. Company A's stock has a beta of 1.30, and its required return is 12.00%. Company B's stock has a beta 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the mar risk premium.) (C-6) a. 9.32% TOL ( 3) directed by how much would b. 9.82% c. 10.33% d. 10.88% e. 11.42% 2. Company A's stock has a beta of 1.30, and its required return is 12.00%. Company B's stock has a beta of 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.) (C-6) a. 8.76% b. 8.98% c. 9.21% d. 9.44% in the for e. 9.08% owned 3. Field Industries' outstanding bonds have a 25-year maturity and $1,000 par value. Their nominal yield to maturity is 9.25%, they pay interest semiannually, and they sell at a price of $850. What is the bond's nomi (annual) coupon interest rate? (C-5) -62704