9. Ten years ago, Hollow Inc. earned $0.50 per share. Its earnings this year wer

Question

9.Ten years ago, Hollow Inc. earned $0.50 per share. Its earnings this year were $2.20. What was the growth rate in earnings per share (EPS) over the 10-year period?

a)       15.17

b)       15.97

c)       16.77

d)       17.61

e)       18.49

10. Lumber Supplies   recently reported $12,500 of sales, $7,250 of operating costs other than   depreciation, and $1,250 of depreciation.  The company had no   amortization charges and no non-operating income.  It had $8,000 of   bonds outstanding that carry a 7.5% interest rate, and its federal-plus-state   income tax rate was 40%.  How much was the firm's taxable income, or   earnings before taxes (EBT)?

a.

$3,230.00

b.

$3,400.00

c.

$3,570.00

d.

$3,748.50

e.

$3,935.93

11. Blue Group has   the following income statement.  How much net operating profit after   taxes (NOPAT) does the firm have?

Sales

$1,800.00

Costs

1,400.00

Depreciation

     250.00

EBIT

$   150.00

Interest expense

      70.00

EBT

$     80.00

Taxes (40%)

      32.00

Net income

$     48.00

a.

$81.23

b.

$85.50

c.

$90.00

d.

$94.50

e.

$99.23

12. Sally holds the following portfolio:

                                      Stock                                        Investment                               Beta
                                      A                                             $150,000                                  1.40
                                      B                                                50,000                                    0.80
                                      C                                               100,000                                   1.00
                                      D                                               75,000                                   1.20
                                      Total                                     $375,000

What is the portfolio's beta?

a)       1.06%

b)       1.17%

c)       1.29%

d)       1.42%

e)       1.56%

  

10. Lumber Supplies   recently reported $12,500 of sales, $7,250 of operating costs other than   depreciation, and $1,250 of depreciation.  The company had no   amortization charges and no non-operating income.  It had $8,000 of   bonds outstanding that carry a 7.5% interest rate, and its federal-plus-state   income tax rate was 40%.  How much was the firm's taxable income, or   earnings before taxes (EBT)?

                       

a.

     

$3,230.00

           

b.

     

$3,400.00

           

c.

     

$3,570.00

           

d.

     

$3,748.50

           

e.

     

$3,935.93

  

Explanation / Answer

ans 9:

ANS: B

N 10

PV $0.50

PMT $0

FV $2.20

I/YR 15.97%

ans 10:

ANS: E

Sales $12,500

Operating costs excluding depr'n $7,250

Depreciation $1,000

Operating income (EBIT) $4,250

ans 11:

ANS: C

EBIT $150.00

Tax rate 40%

NOPAT = $90.00

ans 12: ans B

Stock Investment Percentage Beta Product

A $150,000 40.00% 1.40 0.56

B $50,000 13.33% 0.80 0.11

C $100,000 26.67% 1.00 0.27

D $75,000 20.00% 1.20 0.24

Total $375,000 100.00% 1.17 = Portfolio bet

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