1. Your firm needs a machine which costs $260,000, and requires $41,000 in maintenance for each year of its 5 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 5-year class life category. Assume a tax rate of 30% and a discount rate of 15%. What is the depreciation tax shield for this project in year 5?
rev: 06_17_2014_QC_49608
$49,920
$7,488.00
$14,976.00
$34,944
2. Scribble, Inc. has sales of $92,000 and cost of goods sold of $76,000. The firm had a beginning inventory of $22,000 and an ending inventory of $24,000. What is the length of the days' sales in inventory? (Round your answer to 2 decimal places.)
95.22 days
115.26 days
105.66 days
87.28 days
3. Buying Stock with Commission At your discount brokerage firm, it costs $10.55 per stock trade. How much money do you need to buy 300 shares of Ralph Lauren (RL), which trades at $85.25?
$25,564.00
$28,740.00
$25,585.55
$25,564.45
4. Expected Return If a company's current stock price is $26.90 and it is likely to pay a $2.65 dividend next year. Since analysts estimate the company will have a 15% growth rate, what is its expected return?
3.05%
15.00%
9.85%
24.85%
5. IVY has preferred stock selling for 97.1 percent of par that pays a 7.9 percent annual coupon. What would be IVY's component cost of preferred stock?
7.90%
7.67%
8.14%
22.91%
6. Buying Stock with Commission At your discount brokerage firm, it costs $11.50 per stock trade. How much money do you need to buy 100 shares of International Business Machines (IBM), which trades at $96.32?
$8,482.00
$9,643.50
$10,782.00
$9,620.50
7. Rose Resources faces a smooth annual demand for cash of $10.0 million; incurs transaction costs of $325 every time they sell marketable securities, and can earn 3.9 percent on their marketable securities. What will be their optimal cash replenishment level? (Round your answer to 2 decimal places)
$28,867.51
$408,248.29
$288,675.13
$40,824.83
8. TJ Co stock has a beta of 1.63, the current risk-free rate is 5.93 percent, and the expected return on the market is 14.18 percent. What is TJ Co's cost of equity?
29.04%
32.78%
19.38%
21.74%