III. Calculate the following problems.

1. An asset costs $210,000 with a $30,000 salvage value at the end of its ten-year life. If annual cash inflows are $30,000, calculate the payback period.

2. A company has a profit attributable to ordinary shareholders of $100,000. The number of ordinary shares of $1 in issue during the year was 300,000. The market value of the companys shares at the year-end was $6.50. Calculate the price/earnings ratio for this company.

3. Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are $ 60,000. Determine value of inventory.

4. If the nominal rate of interest is 10% per annum and there is quarterly compounding, calculate the effective rate of interest.

5. Credit sales of Jump Ltd. for the year is $ 12,00,000 and debtors at the end of year $ 240,000. Assuming 360 days in a year, calculate the average collection period.

6. Determine stock turnover ratio if, Opening stock is $ 31,000, Closing stock is $ 29,000, Sales is $320,000 and Gross profit ratio is 25% on sales.

7. You purchased some fixed assets six years ago at a cost of $165,700. You have been depreciating these assets using straight-line depreciation to a zero book value over 10 years. Today, you are selling these assets for $62,500. What is the after-tax cash flow from this sale if the applicable tax rate is 35 percent?

8. You are considering a project that will generate sales of $89,000, costs of $56,000, and annual depreciation of $26,000. What is the value of the operating cash flow if the tax rate is 34 percent?

9. Pete's Garden House has a cost of equity of 15.6 percent, an after-tax cost of debt of 7.1 percent, a debt-equity ratio of 0.45, and a tax rate of 35 percent. What is the firm's weighted average cost of capital?

10. U.S. Treasury bills are yielding 4.6 percent while the market is returning 14.8 percent. What is the expected return on a security that has a beta of 0.86?