1. A firm has revenue of $60,000, its total operating costs including depreciation and cost of goods sold are $50,620, depreciation is $4,620 and its interest expense on outstanding loans is $2,000. What is the firm’s EBIT?
$55,380 $2,760 $9,380 $12,000
2. Suppose you could borrow using either a credit card that charges 1% per month or a bank loan that quotes a nominal rate of 12% compounded quarterly. Which should you choose to get a lower rate?
Bank Loan Credit Card both have the same rate of EFF% Neither. You should issue commercial paper that pays 25%.