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Some Hard and Intermediate Questions

I’m sure some of these are easier than I think it is but can’t seem to get the answer. Let me know what you guys think.

1. An analyst observes the following four annual returns: R1 = 10%, R2 = 15%, R3 = 0%, and R4 = 5%. The equivalent coumpound annual rate is:
A. 5%
B.0.5%
C. 0.0%

2. The Zaxon Company produces one product and labor is the only variable resource in the production process. In the short run, Zaxon faces a horizontal demand curve at $20 per unit. The average product of labor in the short run is given in the following table:
Resource Units–Avg Product of Labor
125
222.5
320
417.5
If the price of each unit of labor (workerdays) is $350, and only whole units can be employed, how many units of labor will Zaxon employ?
A. 1
B. 2
C. 3

3. Which of the following statements about dilutive securities is least likely correct?
A. A simple capital structure is one that contains only common stock and antidilutive securities.
B. A dilutive security is one that will cause EPS to decrease if it is converted into common stock.
C. Warrants with exercise prices less than the yearend stock price can be antidilutive

4. Eatan Inc. has a takeorpay contract with SeaTac Inc. for $1,000,000 per year for five years. Eatan also recently sold receivables of $500,000. The present value of Eatan’s takeorpay contract is $4,000,000 and the buyer of the receivables has recourse to Eatan. Once an analyst has adjusted Eatan’s debt to equity ratio, earnings before interest and taxes, and assets for these two offbalance0sheet financing arrangemtns, the changes are best described by:
D/E –EBITAssets–
A. IncreaseDecrease–Increase by $4M
B. IncreaseIncreaseIncrease by $4.5M
C. DecreaseDecrease–Increase by $5M

If you can show work that’ll be great.
alsrs

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