II. SHORT ANSWER and FREE RESPONSE QUESTIONS (5 questions, 6 points each).

Please write a separate paragraph to explain your answer to each of the following questions.

36) Complete the equal-payments three-year amortization table.

Year	Beginning Principal	Payment	Interest Expense	Principal Reduction	Ending Principal
1	$6,000.00		$480.00		$4,151.80
2		$2,328.20		$1,996.06
3	$2,155.74

37) When estimating a weighted average cost of capital, a firm can use either book

values or market values for estimating the value of the component sources of

capital. Where would you find book values, and what value do they represent? How

would you calculate market values? In general, would you prefer to use market or

book values for estimating the WACC? Under what circumstances would you use

book values?

38) The annual report is a regular activity of public firms and is sent to current owners

(shareholders) and the SEC, and is also made available to prospective owners,

financial analysts, and others interested in a company's performance. Name four of

the major sections contained and discuss how they can be used to provide

information on the company.

39) Report on another on-line site besides yahoo.finance.com and

www.sec.gov/edgar.shtml (EDGAR's) where one can get financial information. In

your answer give the website, how to access information, and what types of

information are available. See if you can find at least one aspect of this site that

might make it superior to that found at yahoo.finance.com.

40) Market value ratios try to answer what question for potential investors? Do financial

statements contain all of the necessary information to answer this question? Explain

in terms of the P/E (price earnings) ratio.