You are thinking of investing in Tikki's Torches, Inc. You have only the following information on the firm at year-end 2008: Net income $520,000 Total debt $12.2 million Debt ratio 42% What is Tikki's ROE for 2008? a. 1.79% b. 10.14% c. 3.09% d. 4.26%

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You've collected the following information about Caccamisse, Incorporated: Sales Net income Dividends Total debt Total equity = = a. Sustainable growth rate b. Additional borrowing c. Growth rate $ 280,000 $ 17,700 $ 6,500 $ 60,000 $ 91,000 a. What is the sustainable growth rate for the company? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What growth rate could be supported with no outside financing at all? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. 24.14% $ 11,574.00 X 4.00 %

You've collected the following information about Caccamisse, Incorporated: Sales Net income Dividends Total debt Total equity = a. Sustainable growth rate b. Additional borrowing c. Growth rate = = = = $ 330,000 $ 18,700 $ 7,500 $ 70,000 $ 101,000 a. What is the sustainable growth rate for the company? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What growth rate could be supported with no outside financing at all? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. % %

Consider a simple firm that has the following market-value balance sheet: Assets Liabilities end equity $1 040 Debt Equity $400 640 Next year, there are two possible values for its assets, each equally likely: $1 180 and $960. Its debt will be due with 4.9% interest. Because all of the cash flows from the assets must go to either the debt or the equity, if you hold a portfolio of the debt and equity in the same proportions as the firm's capital structure, your portfolio should earn exactly the expected return on the firm's assets. Show that a portfolio invested 38% in the firm's debt and 62% in its equity will have the same expected return as the assets of the firm. That is, show that the firm's pre-tax WACC is the same as the expected return on its assets. If the assets will be worth $1 180 in one year, the expected return on assets will be %. (Round to one decimal place.)