1. At a sales level of $40,000, the operating cash flow is $8,500 and the fixed operating costs are $12,000. What will be the operating cash flow if sales are increased to $48,000?
a. $12,600
b. $16,500
c. $10,200
d. $18,200
e. $11,100
2. A company currently expects free cash flow in the upcoming year of $25,000. Each year after that, the free cash flow is expected to grow by 3%. The relevant discount rate for the company’s cash flows is 9% per year. From a discounted cash flow method, what is the value of the company?
a. $417,000
b. $833,000
c. $23,000
d. $278,000
e. $25,000
3. A company currently has no debt, and equity of $3M, and an equity beta of 0.78. If the company changes its capital structure such that it now has $1.5M of debt, then what will the equity beta be if the tax rate is 30%?
a. 1.01
b. 1.17
c. 0.89
d. 1.33
e. 0.78
4. What is the accounting breakeven of the following project: Unit price $20. Variable costs $12. Fixed costs $328. Depreciation $128.
a. 328 units
b. 820 units
c. 27.3 units
d. 41 units
e. 57 units