1) The financial statement of Z Ltd shows that the company has current liabilities of $120,000,

total liabilities of $250,000 and the amount of working capital of the Z Company is $50,000.
Determine the liquidity position of Z Company using the current ratio?

2) A company made total sales of $500,000 with gross profit of $100,000. The opening
inventory is said to be $200,00 and closing inventory is said to be $300,000. Calculate the
number of times the inventory has been sold/replaced by the company.

3) From the below details compute the point at which the company's revenues equal its costs.

Particulars Amount
Sales $ 5,04,39,375
Variable Cost $ 2,51,37,000
Revenue before fixed costs $ 2,53,02,375
Fixed costs $ 1,01,43,000
EBIT $ 1,51,59,375
Interest expense $ 14,88,375
Earnings before taxes $ 1,36,71,000
Taxes at 21% $ 28,70,910
Net income $ 1,08,00,090

4) Dexter Enterprises needs to raise $20 million to fund its capital costs for the following year.
Half of the company's $18 million in revenue from the previous year will be distributed as
dividends. How much common stock would the company need to issue to raise the required
$20 million if the CFO wishes to finance new investments using no more than 40% debt
financing?

5) Two years ago, a person purchased a 20-year bond at its par value of $1,000 with an 8%
coupon rate paid annually. The yield to maturity of the bond is 9%. Due to the requirement
for cash, the person is forced to liquidate the bond. What will be the price of the bond?

6) Last year, $3 in dividends were paid by Frozen Comm. The dividend is projected to increase by 8%
in the following 12 months. The required rate of return is 14%. Calculate the stock price.

7) BC Technology is presently selling its convertible bond ($1,000 par value) for $835, and the bond
has a 25-year maturity, and a 9% coupon rate. The current share price of the company's common
stock is $41, and the conversion ratio is 20. Every two years, interest is paid. If similar non-
convertible bonds are now earning 12%, what is the value of this convertible bond as a pure bond?
8) A 1-year call option on LibertyTech Solutions stock with an exercise price of $60 costs $8.05. The
stock price is $55, and the interest rate on a bank deposit is 4%. What is the value of a 1-year put
option on LibertyTech Solutions with an exercise price of $60?

9) Based on the below tax slab rates, calculate the tax rate for a single taxpayer if his taxable income
is $80,000.

● 10% on income up to $9,950

● 12% on income between $9,951 and $40,525

● 22% on income between $40,526 and $86,375

● 24% on income between $86,376 and $164,925

● 32% on income between $164,926 and $209,425

● 35% on income between $209,426 and $523,600

● 37% on income over $523,600

10) Holidays Inc. had operating income of $30 million on a start-of-year total capitalization of $188
million. Its cost of capital was 11.5%. What was its economic value added?

11) The BWS Corporation stock is selling at $50 a share today.

12) If the 1-year U.S. Treasury bill rate is 7.0 percent, the spot rate between U.S. dollars and British
pounds is £1 = $1.69, and the 90-day forward rate is £1 = $1.68, what rate of interest is expected on
British Treasury bills, assuming that interest rate parity between the dollar and pound exists?

13) With an interest rate of 6%, Bill Gates could, if he wished, turn his $90 billion wealth into a 30-
year annuity of $6.5 billion per year of luxury and excitement (L&E). Unfortunately, L&E expenses
inflate just like gasoline and groceries. Thus, Mr. Gates would find the purchasing power of that $6.5
billion steadily declining. If he wants the same luxuries in 2048 as in 2018, he’ll have to spend less in
2018 and then increase expenditures in line with inflation. How much should he spend in 2018?
Assume the long-run inflation rate is 3%
14) A machine costs $700 and will generate annual cash flows of $100 for 20 years. If the interest
rate is 7.1%, what is the discounted payback period?

15) A project costs $500,000. It is expected to generate taxable income of $200,000 a year for 4
years before accounting for depreciation. The firm’s tax rate is 21% and its cost of capital is 15%.
What is the project NPV if the investment cannot be depreciated?