Chapter Six: Mini Case
1. How does Rajs age affect his decision to get an MBA?
Rajs age affects his decision because it determines how long he can collect a salary until
his retirement. Since he is older and deciding to change his career path he has less
Chapter Four: Mini Case Three
1. Calculate the internal growth rate and sustainable growth rate for Tuxedo Air. What do these numbers mean?
Internal Growth Rate = ROA X R / (1-(ROA X R) = (0.08397*0.63576)/(1-(0.08397*0.63576) = 0.0563
ROA = NI
Chapter 7 Mini Case
1. The security of the bond that is, whether the bond has collateral
If a bond is secured against some sort of collateral it will normally have a lower coupon
rate than an unsecured bond. This is because investors are taking less risk
Chapter 8 Stock Valuation
1. Assuming the company continues its current growth rate, what is the value per share of the
Net Income = EPS X Shares = 4.54 X 100,000 = $454,000
Dividends = 63,000 X 2 = $126,000 [per share = 1.26]