QUESTION 12

1. A firm owns a piece of equipment that it originally purchased for $250,000. The residual value is $25,000, the firm uses straight line depreciation, and the useful life is 20 years. How much depreciation expense does the firm show on its income statement for year 12?

A.

$11,250

B.

$12,500

C.

$18,750

D.

$1,250

E.

$0

QUESTION 13

1. A firm owns a piece of equipment that it originally purchased for $250,000. The residual value is $25,000, the firm uses straight line depreciation, and the useful life is 20 years. The firm purchased the equipment on the first day of year one and sold it on the last day of year 15 for $75,000. What is the gain or loss on the sale?

A.

$11,250 Gain

B.

$6,250 Loss

C.

$12,500 Loss

D.

$75,000 Gain

E.

$81,250 Loss

QUESTION 14

1. A firm has the following as part of its capital structure:

• 500,000 common stock shares outstanding
• $250,000 worth of notes that are convertible to 100,000 common stock shares
• Net income of $750,000
• Dividends paid on common stock were $500,000
• Dividends paid on preferred stock were $75,000

What is the firm's basic EPS?

A.

$1.25

B.

$1.35

C.

$1.50

D.

$1.96

E.

$2.08