1. Arson Corporation has a current stock price of $20. Next years dividend is projected to be $4.00 payout ratio is 20% and projected ROE is 10%. The cost of equity is:

A. 25%

B. 28%

C. 30%

D. None of the above.

2. The cost of debt is calculated:

a. before taxes

b. After taxes

c. Using depreciation

3. Synergy between two companies :

A. Is the complimentary situation where value is created in the joining of the firms

B. may result in the improvement of the aquirers bottom line

c. Could be defined by purely quantitive benefits

d. A and B

e. A, B and C

4. Jansen corporation has projected EPS of $4.00. The current share price of Jansen is $20. The cost of equity is :

a. 10%

b. 15%

c. 20%

d. None of the above

5. Ellison Corporation acquires Redstone Corp because Redstone has unused productions facilities that Ellison needs, this is an example of:

a. Diversification

b. Vertical Integration

c. Horizontal integration

d. none of the above

6. The post merger P/E for Aston Corp is 12. The number of shares outstanding is 100,000 The earning valuation of Aston is $3.6 million. The earning per share for Aston the previous four quarter is :

A. $1.00

B.  $2.00

C. $3.00

D. None of the above