1. The EBIT is $40,000, depreciation is $10,000, and taxes are $6,000. What is the operating cash flow (OCF)?

$50,000

$44,000

$56,000

$28,000

2. A firm has revenue of $100,000, the cost of goods sold is $46,000, other expenses (from selling and administration) are $28,000, interest expenses are $8,000 and depreciation is $10,000. What is the EBIT?

$26,000

$16,000

$8,000

$54,000

3. Kanita owns 50 shares of FloorMart Inc. The firm has a semiannual dividend policy of $0.75 per share or the option to reinvest the cash dividends into additional shares of company stock. If the stock is selling for $25.00 per share ex-dividend, how many shares of stock will Kanita receive in the next dividend period if she chooses the dividend reinvestment plan?

1.5 shares

6.7 shares

0.73 shares

0.67 shares

4. Charles Motorsports has a new project that will require the company to borrow $5,000,000. Charles has made an agreement with three lenders for the needed financing. Citizens' Bank will give $2,500,000 and wants 9% interest on the loan. Visitors' Bank will give $2,000,000 and wants 13% interest on the loan. Peoples' Bank will give $500,000 and wants 16% interest on the loan. What is the weighted average cost of capital for this $5,000,000?

10.45%

11.67%

11.3%

12.26%

5. Ella's firm has preferred stock outstanding that pays a current dividend of $4.00 per year and has a current price of $32.25. Currently, her preferred stock makes up approximately 15% of her firm's long-term financing. What is the market required rate of return on Ella's firm's preferred stock?

9.40%

18.04%

12.4%

9.00%