QUESTION TWO Part A Given the following information: Revenues: $18 million Liabilities: $10 million Total Expenses: $7 million Cost of Goods Sold: $3 million Average Inventory: $6 million Average A/R: $2 million Average Fixed Assets: $10 million Accounts Payables: $4 million Assume no other assets or liabilities exist beyond what is articulated above: a) Compute Net Profit Margin b) Compute Total Asset Turnover c) Compute Return on Equity (ROE) d) Compute Inventory Turnover e) How much equity would have to be swapped out for debt to increase ROE by 1% assuming that nothing else changes? f) What is the firm's sustainable growth rate if dividends are equal to $0.5 million? Part B A family buys a house for which they assume a mortgage of $200,000. The annual mortgage rate is 9% and is compounded monthly. The loan amortization period is 15 years and the mortgage payments will be made at the end of each month a) What is the monthly mortgage payment? b) What will be the outstanding loan amount at the end of five years? c) What is the total interest that will be paid over the amortization period