Question 1. Beranek Corp. has $410,000 of assets, and it uses no debt-it is financed only with common equity. The new CFO wants to employ enough debt to bring the debt to assets ratio to 40%, using the proceeds from the borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio?

• $155,800
• $164,000
• $172,200
• $180,810
• $189,851

Question 2. Suppose a State of New York bond will pay $1,000 10 years from now. If the going interest rate on these 10-year bonds is 5.5%, how much is the bond worth today?

• $585.43
• $614.70
• $645.44
• $677.71
• $711.59

Question 3. You sold a car and accepted a note with the following cash flow stream as your payment. Which was the effective price you received for the car, assuming an interest rate of 6.0%?

Years: 0 1 2 3 4

|-----------|--------------|--------------|--------------|

CFs: $0 $1,000 $2,000 $2,000 $2,000 (Points : 10)

• $5,987
• $6,286
• $6,600
• $6,930
• $7,277

Question 4. Suppose you borrowed $12,000 at a rate of 9.0% and must repay it in four equal installments at the end of each of the next 4 years. How large would your payments be?

• $3,704.02
• $3,889.23
• $4,083.69
• $4,287.87
• $4,502.26