quesion 1

Eight months ago, Turner purchased 110 shares of Delta Frames stock at a price of $45.50 a share. Delta pays a quarterly dividend of $2.10 a share. Today, Turner sold all of his shares for $49 per share. What is Turner's total capital gain on this investment?

select

a. $155

b. $385

c. $200

d. $350

e. $180

Question 2

Al's Audio has a cost of debt of 7 percent, a cost of equity of 11 percent, and a cost of preferred stock of 9 percent. The weight for debt is 0.13, the weight for preferred shares is 0.34, and the weight for common stock is 0.53. The company's tax rate is 34 percent. What is the weighted average cost of capital for Al's Audio Shop?

Select one:

a. 6.54 percent

b. 9.49 percent

c. 6.14 percent

d. 9.15 percent

e. 9.60 percent

Question 3

A firm has $500 in debt at a cost of 7%, a 34% tax rate, a total firm value of $1,100, and an unlevered return of 13%. What is the WACC?

Select one:

a. 11.84%

b. 9.74%

c. 11.41%

d. 10.99%

e. 9.24%

Question 4

Bob's Toys has a fixed asset turnover rate of 1.2 and a total asset turnover rate of .84. Gerold's Toys has a fixed asset turnover rate of 1.1 and a total asset turnover rate of .96. Both companies have similar operations. Bob's Toys:

Select one:

a. is generating $1 in sales for every $1.20 in net fixed assets.

b. is generating $1.20 in net income for every $1 in net fixed assets.

c. is using its fixed assets less efficiently than Gerold's Toys.

d. has $.84 in total assets for every $.96 Gerold's has in total assets.

e. is using its total assets less efficiently than Gerold's Toys.

Question 5

You purchase a machine for $210,000 which belongs in a 30% CCA class. What is the present value of the CCA tax shield on the machine if it is sold at the end of the sixth year for $24,000, your tax rate is 34%, and the appropriate discount rate is 10%?

Select one:

a. $40,143

b. $66,623

c. $86,994

d. $49,063

e. $47,661