1. Balon Plastics, Inc. is trying to decide how best to finance a proposed $10,000,000 capital investment. Under Plan I, the project will be financed entirely with long-term 9 percent bonds. The firm currently has no debt or preferred stock. Under Plan II, common stock will be sold to net the firm $20 a share; presently, 1,000,000 shares are outstanding. The corporate tax rate for Balon is 40 percent. What is the indifference level of EBIT associated with the two financing plans.
a) $2,700,000
b) $2,790,000
c) $2,900,000
d) $2,400,000
2. Which agent approves chartering and mergers of nationally chartered banks?
A) Federal Deposit Insurance Corporation
B) Department of Banking in each state
C) Federal Reserve Bank in each district
D) Office of Comptroller of the Currency
E) SEC
3. A bank has interest income of $55 million, interest expense of $25 million, has a PLL $5 million, has net noninterest income of -$7 million and pays taxes of 34%. If the average assets are $450 million what is the bank's ROAA?
A) 4.00%
B) 3.65%
C) 2.64%
D) 1.98%
E) 1.26%