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1. If a firm produces a 12 percent return on assets and also a 12 percent return on equity, then the firm:

a. is using its assets as efficiently as possible.

b. has no net working capital.

c. has an equity multiplier of 2.

d. also has a current ratio of 10.

e. has no debt of any kind.

2. You purchase a machine for $200,000 which belongs in a 30% CCA class. What is the present value of the CCA tax shield on the machine if it is sold at the end of the sixth year for $24,000, your tax rate is 35%, and the appropriate discount rate is 10%?

a. $86,994

b. $40,143

c. $46,557

d. $52,215

e. $66,623

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92858005

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