QUESTION 4 Which of the following would be best considered to be a principal-agent problem in the behaviour of the following financial managers? a. Sue instructs her staff to skip safety inspections in one of the company's factories, knowing that it will likely fail the inspection and incur significant costs to fix. b. James ignores an opportunity for his company to invest in a new drug to fight Alzheimer's disease, judging the drug's chances succeeding as low. c. Bill chooses to pursue a risky investment for the company's funds, solely because his compensation will substantially rise if it succeeds. d. Michael chooses to enhance his firm's reputation at some cost to its shareholders by sponsoring a team of athletes for the Special Olympics. QUESTION 5 A firm has sales of $1000. Its EBIT is $250, and it has interest expense of $50. Further, its tax rate is 25%. What is its net profit margin? a. 75% O b. 40% c. 15% d. 25% QUESTION 6 Suppose that a company has following short-term assets: Cash: $50,000; Marketable Securities: $50,000; Accounts Receivable: $100,000; Inventory: $100,000. Further, the company has Property, Plant and Equipment worth $1,000,000. In terms of liabilities, the company has short term and long-term liabilities worth $200,000 and $500,000 respectively. What is the company's current ratio? a. 1 O b. 1.5 c. 2 d. 2.5