Question 43. 43. Given the following information, leverage will add how much value to the unlevered firm per dollar of debt? Corporate tax rate: 34% Personal tax rate on income from bonds: 20% Personal tax rate on income from stocks: 0% (Points : 5)

$0.175 $0.472 $0.528 $0.825 None of these

Question 44. 44. The systematic response coefficient for productivity, p, would produce an unexpected change in any security return of ____ P if the expected rate of productivity was 1.5% and the actual rate was 2.25%. (Points : 5)

0.75% 0.75% 2.25% 2.25% 1.5%

Question 45. 45. Phil's Carvings, Inc. wants to have a weighted average cost of capital of 9%. The firm has an after-tax cost of debt of 5% and a cost of equity of 11%. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital? (Points : 5)

.33 .40 .50 .60 .67

Question 46. 46. An investment is available that pays a tax-free 6%. The corporate tax rate is 30%. Ignoring risk, what is the pre-tax return on taxable bonds? (Points : 5)

4.20% 6.00% 7.67% 8.57% None of these

Question 47. 47. Holden Bicycles has 1,000 shares outstanding each with a par value of $0.10. If they are sold to shareholders at $10 each, what would the capital surplus be? (Points : 5)

$100 $900 $9,900 $10,000 $11,000

Question 48. 48. Bradley Snapp has deposited $6,000 in a guaranteed investment account with a promised rate of 6% compounded annually. He plans to leave it there for 4 full years when he will make a down payment on a car after graduation. How much of a down payment will he be able to make? (Points : 5)

$2,397.00 $3,288.00 $6,321.32 $7,574.86 $8,857.59

Question 49. 49. Your firm has average daily receipts of $2,500. These receipts are available after 6 days on average. The interest rate that could be earned is .02% (.0002) per day. What is the approximate cost of the float per day? (Points : 5)

$2.50 $3.00 $30.00 $50.00 None of these

Question 50. 50. Jamestown Ltd. currently produces boat sails and is considering expanding its operations to include awnings for homes and travel trailers. The company owns land beside its current manufacturing facility that could be used for the expansion. The company bought this land ten years ago at a cost of $250,000. Today, the land is valued at $425,000. The grading and excavation work necessary to build on the land will cost $15,000. The company currently owns some unused equipment valued at $60,000. This equipment could be used for producing awnings if $5,000 is spent for equipment modifications. Other equipment costing $780,000 will also be required. What is the amount of the initial cash flow for this expansion project? (Points : 5)

$800,000 $1,050,000 $1,110,000 $1,225,000 $1,285,000