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QManagerial Finance

9. Nikko Corp.'s total common equity at the end of last year was $305,000 and its net income after taxes was $60,000. What was its ROE?

a. 16.87%
b. 17.75%
c. 18.69%
d. 19.67%
e. 20.66%

10. Northwest Lumber had a profit margin of 5.25%, a total assets turnover of 1.5, and an equity multiplier of 1.8. What was the firm's ROE?

a. 12.79%
b. 13.47%
c. 14.18%
d. 14.88%
e. 15.63%

11. Orono Corp.'s sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned(TIE) ratio?

a. 4.72
b. 4.97
c. 5.23
d. 5.51
e. 5.80

12. Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds?

a. The company’s bonds are downgraded.
b. Market interest rates rise sharply.
c. Market interest rates decline sharply.
d. The company's financial situation deteriorates significantly.
e. Inflation increases significantly.

13. D. J. Masson Inc. recently issued noncallable bonds that mature in 10 years. They have a par value of $1,000 and an annual coupon of 5.5%. If the current marketinterest rate is 7.0%, at what price should the bonds sell?

a. $829.21
b. $850.47
c. $872.28
d. $894.65
e. $917.01

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