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Timor Inc. recently issued non-callable bonds that mature in 8 years. They have a par of $5,000 and an annual coupon of 6.0%. If the current market interest rate is 5.4%, at what price should the bonds sell? DJJ Company’s stock has a beta of 1.20, the risk-free rate is 4.0%, and the market risk premium is 6.0%. What is the firm’s cost of equity from retained earnings based on the CAPM? Which of the following ratios is MOST informative regarding how capable a firm is of managing their short-term debts? Answer Inventory Turnover Ratio Profit Margin Current Ratio Price-Earnings Ratio Suppose the real risk-free rate is 2.15%, the average expected future inflation rate is 1.10%, and there is total maturity risk premium of 0.25% on a 3-year Treasury security. What rate of return would you expect? Disregard cross-product terms, i.e., if averaging is required, use the arithmetic average. Panel Corp’s sales last year were $160,000, and its net income was $20,000. What was its profit margin? During 2011, Linver Inc. paid out $23,000 of common dividends. It ended the year with $245,000 of retained earnings versus the prior year’s retained earnings of $165,000. How much net income did the firm earn during the year? Using your financial calculator or spreadsheet, at 6% compounded annually, approximately how long will it take $10,000 to double?

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