Problem 1. A firm has an average investment of $1,000 during the year. During the same time, the firm generates after-tax earnings of $150.
If the cost of capital is 10%, what is the net return on investment?
Problem 2. A firm has $100 million in current liabilities, $200 million in total long-term liabilities, $300 million in stockholders' equity, and total assets of $600 million. Calculate the firm's ratio of long-term debt to long-term debt plus equity.
Problem 3. A corporation has 1,000,000 shares outstanding, and 10 directors are up for election. If the stock features cumulative voting, approximately how many shares do you have to muster in order to guarantee yourself a place on the board of directors? (Ignore possible ties.)
- 500,000
- 200,000
- 100,000
- 1,000,000