1. Carroll, Inc. has a total debt ratio of .63, total debt of $323,000 and net income of $40,250. what is the company's return on equity

2. You have found three investment choices for a? one-year deposit:9% APR compounded? monthly, 9% APR compounded? annually, and 10% APR compounded daily. Compute the EAR for each investment choice.?

3. An annuity pays annual payments at the beginning of each year for 20 years. For the first 10 years the payments are 100. Starting with payment 11 each payment is increased by 6% over the previous payment. The annuity earns at an annual effective rate of 8%. Find the present value of this annuity.

(a) 1177 (b) 1190 (c) 1202 (d) 1213 (e) 1225

## Two machines required in your production processYou are considering the purchase of one of two machines required in your production process. Machine A has a life of two years. Machine A costs $50 initially and then $70 per year in maintenance. Machine B has an initial cost of $90. It requires $40 .. |

## What must be the value of the risk-free rateSuppose that it is possible to borrow at the risk-free rate, rf . What must be the value of the risk-free rate? |

## What is the discount margin for the floater in basis pointsWhat is the discount margin for the floater in basis points? |

## What is the effective rate of interestZerox Copying Company plans to borrow $202,000. New Jersey National Bank will lend the money at one-half percentage point over the prime rate at the time of 10.50 percent (11 percent total) and requires a compensating balance of 29 percent. What is t.. |

## Find the future values of ordinary annuitiesFind the future values of these ordinary annuities. Compounding occurs once a year. Round your answers to the nearest cent. Rework previous parts assuming that they are annuities due. Round your answers to the nearest cent. |

## Portfolio would gain-lose approximately how much moneyYou have a $250,000 invested in bond A which has a modified duration of 3 and $175,000 invested in bond B which has a modified duration of 12. If interest rates rise by 50bias points, your portfolio would gain/lose approximately how much money? |

## Statements about project cash flows is accurateWhich of the following statements about project cash flows is accurate? |

## Depreciated straight-line to zero over three-year tax lifeThe fixed asset will be depreciated straight-line to zero over its three-year tax life, |

## Reduced with an increase in the firmHolding all other things constant, additional debt financing needed would be reduced with an increase in the firm's |

## Saved dollars are available at the end of each monthSuppose you plan to save $670 a month for the first 5 years (saved dollars are available at the end of each month). |

## Define marginal tax ratesImagine a friend says that he doesn’t want to take a job that pays slightly more money only because he will be bumped into the next tax bracket and end up taking home less income after taxes.how would you advise this friend? Define marginal tax rates.. |

## What is equipment after-tax salvage valueKarsted can sell the used equipment today for $6.5 million, and its tax rate is 35%. What is the equipment's after-tax salvage value? |

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