2. Stapples taxable income was $340,000 last year selling widgets. How much will it pay in taxes?
   1. 1. $13,260.00; 39.0%
      2. $99,000; 39.6%
      3. $105,000; 42.0%
      4. $132,600; 39.0%
      5. $150,650; 39.0%
   2. . What is the expected return for the following stock? The average state of nature has a probability of occurring of 55% and an expected return of 20%; the recession state of nature has a 20% chance of occurring and an expected return of 10%; and the depression state of nature has a 25% chance of occurring and an expected loss of 20%. a. 0.055 b. 0.080 c. 0.095 d. 0.105 e. 0.110
   3. A stock that pays a constant dividend of $2.50 (forever) currently sells for $20.00 (PV). What is the required rate of return? a. 11.0% b. 11.5% c. 12.0% d. 12.5% e. 13.0%
   4. You hold a portfolio of two stocks. The first stock has a beta of .5 and the second stock has a beta of 2.0. You have invested 75% of your wealth in stock 2. Return on the market portfolio is 20%. The risk-free rate is 5%. The portfolio beta is
   5. 1. 0.500
   6. 0.875
   7. 1.625
   8. 2.051
   9. 2.532
   11. What would you pay for a bond that pays an annual coupon of $35, has a face value of $1,000, matures in 7 years, and has a yield to maturity of 8%?

   12. a. $765.71

       b. $875.34

       c. $900.18

   13. Atlantis Inc's latest net income was $1,250,000, and it had 225,000 shares outstanding. The company wants to pay out 45% of its income. What dividend per share should it declare?

   14. a. $2.14

       b. $2.26

       c. $2.38

       d. $2.50

       e. $2.63

       d. $910.14

       e. $976.38

   15. Mapp Corp's total common equity at the end of last year was $405,000 and its net income was $70,000. What was its ROE?

   16. a. 14.82%

       b. 15.60%

       c. 16.42%

       d. 17.28%

       e. 18.15%