solution
solution.
Which of the following is TRUE regarding “Break-even analysis”?
| A. |
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| B. |
At Break-even point, EBITDA = 0 |
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| C. |
At Break-even point, Net Working Capital = 0 |
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| D. |
At Break-even point, Net Income = 0 |
10)
Suppose you are buying a house for $500,000 with 20% downpayment. The remaining 80% is financed with a loan.
Your bank is offering an interest-only loan (as shown in the video) for 4.5% annual rate.
If the house value increases to $525,000 one year after your purchased, How much is the return on your investment?
Enter your answer in the following format: 0.1234;
Hint #1: Answer is between 0.0581 and 0.0798
11)
ABC software is trying to establish its optimal capital structure. It currently has 25% debt and 75% equity.
However, the firm CEO believes that the firm should use more debt. The risk-free rate is 3% and the market risk premium is 5%.
The firm’s tax rate is 25% and the cost of equity is 12%, as determined by the CAPM.
Assume that the firm changed its capital structure to 40% debt and 60% equity.
How much should be the firm’s levered stock beta with the new capital structure?
Enter your answer in the following format: 1,234;
Hint #1: Answer is between 1.79 and 2.46
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