1. Given the following information: sales = $500; costs = $425; tax rate = 34%. Assuming costs run at a constant percentage of sales, if sales rise by 11% next year, what will net income be?
Select one: a. $36.30 b. $73.26 c. $66.00 d. $72.60 e. $54.95
2. Given the following information: current assets = $425; fixed assets = $400; long-term debt = $455; equity = $300; sales = $470; costs = $400; tax rate = 34%. Suppose that assets and costs maintain a constant ratio to sales. What is the total external financing needed if sales increase 25%? Assume the firm pays no dividends.
Select one: a. $190.00 b. $183.75 c. $173.50 d. $66.25 e. $148.50
3. The financial statement that calculates EBIT over a period of time is the statement of cash flows.
Select one: True False
4. Return on equity equals total sales divided by total equity.
Select one: True False
5. You borrowed $1,500 at 6% compounded annually. Your payments are $143.17 at the end of each year. How many years will you make payments on the loan?
Select one: a. 20 years b. 19 years c. 18 years d. forever e. 17 years