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F08finMTI-421Solutions rev A

# F08finMTI-421Solutions rev A - Fall 2008 FBE 421 MIDTERM I...

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Fall 2008 FBE 421 MIDTERM I SOLUTIONS Problem 1 . Answer A EBIT = 60 + 40 + 18 = 118 = 1,400 – 780 – 430 – 47 – 25 = 118 Problem 2 . Answer B EBITDA = EBIT + depreciation = 118 + 47 = 165 = 1,400 – 780 – 430 – 25 = 165 Problems 3 . Answer A NOPAT = EBIT x (1 – t) = 118 x (1 – 40%) = 70.80 EBIT = 118 t = 40/(40 + 60) = 40% Problem 4 . Answer C ROE = NI/equity = 60/200 = 30% Problem 5 . Answer E ROIC = NOPAT/TOC = 70.80/370 = 19.1% TOC = Debt + equity – cash = 30 + 100 + 50 + 200 – 10 = 370 = Total assets – cash – NIBLs = 480 – 10 – (60 + 40) = 370 Problem 6. Answer D ENI = (ROE – Ke) BVE = (30% – 12%) 200 = 36 = NI – Ke(BVE) = 60 – (12% x 200) = 36 Problem 7 . Answer B EVA = (ROIC – WACC) x TOC = = (19.1% - 11%) 370 = 29.97 = NOPAT – WACC(TOC) = 70.80 – (11% x 370) = 30.10 Problem 8 . Answer A ROA = NI/Assets = 60/480 = 12.5% 1

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Problem 9 : Answer A Net income margin = 60/1,400 = 4.3% Problem 10 : Answer C Operating capital turnover = Sales/TOC
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F08finMTI-421Solutions rev A - Fall 2008 FBE 421 MIDTERM I...

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