Mid-term Solutions - FIN 610 Midterm Exam Answersheet...

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FIN 610 Mid-term Exam Answersheet - Instructor Only Points Q # Answer 10 1 E 10 2 A 10 3 C 10 4 E 10 5 D 10 6 D 10 7 D 10 8 C 10 9 B 10 10 C 100
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Show your work for each problem showing formulas/functions Problem 1: Problem 2: Debt $40 Equity $100 The debt-equity ratio is .40 Debt-Equity Rati 0.40 Thus, if total debt is $40, total equity is $100 and total assets are $140 Total Assets $140 Total Debt Ratio: Total Debt/Asset 0.29 Problem 3: You buy an annuity which will pay you $12,000 a year for ten years. The payments are paid on the 0.491650708 0.07 7.023581541 x (1+.07) 7.515232249 x $12000 $90,182.79 Problem 4: Based on the profitability index (PI) rule, should a project with the following cash flows be accepted if the discount rate is 8%? Why or why not? $10,000 + $7,300 + $3,700 = $9,259 + $6,259 + $2,937 = $18,455.01 PI = $18,455.01 $18,600.00 Problem 5: Le Place has sales of $439,000, depreciation of $32,000, and net working capital of $56,000. The Sales $439,000 firm has a tax rate of 34% and a profit margin of 6%. The firm has no interest expense. What is the
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Mid-term Solutions - FIN 610 Midterm Exam Answersheet...

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