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problem1: Burger Corp has 500,000 dollar of assets, and it uses only common equity capital [zero debt]. Its sales for the last year were $600,000, & its net income after taxes was 25,000 dollar. Stockholders recently voted in a new management team that has assured to lower costs & get the return on equity up to 15 percent. Determine the profit margin would Burger need in order to achieve the 15 percent ROE, holding everything else constant?

[A] 11.00%

[B] 12.50%

[C] 14.00%

[D] 8.00%

[E] 9.50%

problem2: Rex Corp's EBITDA last year was 385,000 dollar (= EBIT + depreciation + amortization), its interest charges were dollar 10,000, it had to repay dollar 25,000 of long term debt, and it had to make a payment of $20,000 under a long term lease. The firm had no amortization charges. find out the EBITDA coverage ratio?

[A] 7.91

[B] 8.25

[C] 8.42

[D] 7.36

[E] 7.69

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  • Category:- Basic Finance
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