PART III. Solve the following problems.

1.Phone Corp. current stock price is $84. There are 205 million shares outstanding and the book value of equity is $9.724 billion. What is Phone Corps market-to-book ratio? (Hint: Use 2 decimal points for your calculations.)

A. 2.12. B. 1.77. C. 2.57. D. 3.64. E. None of the above.

2.A corporations has 0.205 billion of common shares outstanding, net earnings of $1.311 billion, book value of common shares of $9.724 bil- lion, and a market capitalization of $17.2 billion. What is the market value added of this corporation?

A. $6,478 million B. $8.476 billion. C. $8,236 million. D. $9.894 billion. E. None of the above.

3.Which of the following is correct for a firm with earnings per share (EPS) of $2 per share and a 40 percent payout ratio? A. 40 percent of earnings will be plowed back into the firm. B. Dividends will equal $60 per share.

C. Book value per share of equity will increase by $1.20. D. Retained earnings will be unchanged. E. None of the above.

The following information relates to questions 4 - 5.

A corporation has net income of $1,311 million, after-tax interest ex- pense of $477.4 million, debt of $7,018 million, shareholders equity of $9,724 million, and total assets of $9,470 million.

4.Give the above information, what is the return on capital (ROC) of this corporation? (Hint: Use 3 decimal points for your calculations.) A. 14.7% B. 12.8%

C. 11.4% D. 10.6% E. None of the above.

5.Given the above information, what is the return on assets (ROA) of this corporation? (Hint: Use 3 decimal points for your calculations.)

A. 11.6% B. 13.9%

C. 17.8% D. 10.6% E. None of the above.

6.What is the market price of a share of stock for a firm with 200,000 shares outstanding, a book value of equity of $3,000,000, and a mar- ket/book ratio of 6.5? A. $92.10.

B. $97.50. C. $84.82. D. $75.60. E. None of the above.

7.You invest $1,000 at 6% compounded monthly. How much will you have in 1.5 years? (Hint: use 4 decimal places for your calculations.)

A. $1,200.80. B. $1,941.25. C. $1,093.90. D. $2,157.30. E. None of the above.