Question 10

Byrd Lumber has 1 million shares of common stock outstanding and its stock price is $35 a share. On the balance sheet, the company has $10 million of common equity. What is the company's Market Value Added (MVA)?

-$15,000,000

$5,000,000

$10,000,000

$15,000,000

$25,000,000

Question 11

Advantages of the corporate form of business, over other forms, include all of the following except:

Lower costs of separation of owners from managers, or so-called agency costs.

Greater ease of raising capital.

Limited liability of the shareholders for corporate misdeeds.

Greater liquidity of ownership interests.

Greater ability to hire talented management.

Question 12

You are saving for retirement. You hope to have $1,000,000 accumulated in 35 years, making equally-sized annual payments in a world with expected returns of 4.5% over that 35 year period. To the nearest dollar, what is the expected size of your annual payments?

$45,000

$29,857

$57,270

$13,577

$12,270

Question 13

You are given the following information: Book value of stockholders' equity = $2.5 million; price/earnings ratio = 10; shares outstanding = 100,000; and market/book ratio = 1.5. Calculate the market price of a share of the company's stock.

$37.50

$25.00

$50.00

$75.00

$16.67