[1.]If the nominal interest rate is 6% and the inflation rate is 4%, what is the real interest rate?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Real Interest Rate ____________ %

[2.] OceanGate sells external hard drives for $300 each. Its total fixed costs are $30 million, and its variable costs per unit are $230. The corporate tax rate is 30%. If the economy is strong, the firm will sell 2 million drives, but if there is a recession, it will sell only half as many.

a.What will be the percentage decline in sales if the economy enters a recession?

Percentage decline in sales _________%

b.What will be the percentage decline in profits if the economy enters a recession?

Percentage decline in profit _________%

c.Comparing your answers to (a) and (b), how would you measure the operating leverage of this firm?

Operating Leverage ____________

[3.] Deployment Specialists pays a current (annual) dividend of $1 and is expected to grow at 20% for two years and then at 5% thereafter. If the required return for Deployment Specialists is 8.0%, what is the intrinsic value of its stock?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Intrinsic Value ___________

[4.] The market capitalization rate for Admiral Motors Company is 7%. Its expected ROE is 12% and its expected EPS is $6. The firm's plowback ratio is 50%.

a.Calculate the growth rate.(Input your answer as a nearest whole percent.)

Growth Rate _____________%

b.What will be its P/E ratio?(Do not round intermediate calculations.)

P/E Ratio ______________ %

[5.] a.Computer stocks currently provide an expected rate of return of 14%. MBI, a large computer company, will pay a year-end dividend of $1 per share. If the stock is selling at $20 per share, what must be the market's expectation of the growth rate of MBI dividends?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Growth Rate ____________ %

b.If dividend growth forecasts for MBI are revised downward to 4% per year, what will be the price of the MBI stock?(Round your answer to 2 decimal places.)

Price ____________

[6.] Use the DuPont system and the following data to find return on equity.(Do not round intermediate calculations. Round your answer to 1 decimal place.)

Leverage ratio 2.8

Total asset turnover 2.6

Net profit margin 6.1%

Dividend payout ratio 33.0%

Return on Equity ____________%

[7.] A firm has an ROE of 2%, a debt/equity ratio of 0.6, a tax rate of 30%, and pays an interest rate of 5% on its debt. What is its operating ROA?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

ROA ______________ %

[8.] An analyst gathers the following information about Meyer, Inc.:

• Meyer has 1,400 shares of 9% cumulative preferred stock outstanding, with a par value of $100 and liquidation value of $110.
• Meyer has 24,000 shares of common stock outstanding, with a par value of $20.
• Meyer had retained earnings at the beginning of the year of $5,200,000.
• Net income for the year was $74,000.
• This year, for the first time in its history, Meyer paid no dividends on preferred or common stock.

a.Calculate the total book value of Meyer's common stock.

Total Book Value _____________

b.What is the book value per share of Meyer's common stock?(Round your answer to 2 decimal places.)

Book Value per share ___________