Exam 1 Instructions: No book No notes No outside help No browser No phone No Excel Make sure that I can see you face. Hold scratch piece of paper up to camera. Use one computer. By typing your full name below, you agree to follow all of the instructions above. If you fail to follow the instructions above, or in any other way engage in dishonest activity while preparing for or taking this exam, you will earn a zero on the exam, and possibly face further disciplinary action, which may include earning a failing grade for the course and expulsion from the business school.

What is the total debt ratio for this firm?

Your credit card company quotes you a rate of 14.9% APR. Interest is billed monthly. What is the actual rate of interest you are paying? 

Acme Magnets stock is selling for $100 today.  It is expected that the company will pay a dividend of 5 dollars per share over the next year, and it will then be sold for $120 in exactly one year.  What is the expected total return for the shareholders on this stock?

What was Textron’s effective tax rate in 2007?

The following questions are short answer.  Please do not write more than a few sentences for any one question, and feel free to use bullet points when possible.

You are considering the purchase of a semi-annual bond, with 7 years remaining until maturity.  It has a $1,000 face value, with a coupon rate of 6%, and currently sells for $894.37 in the market.  Given this information, what is the annual interest rate on this bond?

What is the operating cash flow each year?

The market value of Charcoal Corporation’s common stock is $20 million, and the market value of its debt is $5 million. The yield to maturity is 7%.  The beta of the company’s common stock is 1.25, and the market risk premium is 8%.  If the T-bill rate is 5%, what is the company’s weighted average cost of capital? (Assume no taxes.)

Assume that you read that Textron was sued yesterday by government regulators for manipulating prices.  Under what form of market efficiency would you be able to profit off of this information?