Question 38 (Mandatory) (0.6 points) Suppose that the financial ratios of a potential borrowing firm took the following values: X, = Net working capital/Total assets = 0.15, Xy - Retained earnings/Total assets=0.10, X3 - Earnings before interest and taxes/Total assets 0.15, X= Market value of equity/Book value of long-term debt = 0.40, X5 = Sales/Total assets ratio = 0.8. Calculate the Altman's Z-score for this firm. o o o o Question 39 (Mandatory) (0.6 points) Suppose a linear probability model you have developed finds there are two factors influencing the past bankruptcy behavior of firms: the debt ratio and the profit margin. Based on past bankruptcy experience, the linear probability model is estimated as: PD = 0.15 (debt ratio) + 0.05 (profit margin) A firm you are thinking of lending to has a debt ratio of 50 percent and a profit margin of 8 percent. Calculate the firm's expected probability of default, or bankruptcy. 0 7.90 percent 11.6 percent 0 30.00 percent O 7.80 percent