Investing $100,000 in additional raw materials today—mostly in palladium—should allow 

Cryogenic Concepts to increase production and earn an additional $112,000 next year. 

This payoff would cover the investment today, plus a 12 percent return. Palladium is 

traded in commodity markets. The CFO has studied the history of returns on investments 

in palladium and believes that investors in that precious metal can reasonably expect a 15 

percent return. Is Cryogenic's investment in palladium a good idea? Why or why not? 

 

Why are secondary market transactions of importance to corporations?

 

A company has announced $50,000 in net income after paying taxes of $26,000 and

interest of $20,000. They intend to pay $17,000 of net income as dividends. Their assets 

have averaged $600,000 over the past year, during which their total debt ratio has 

averaged 40%. Given this information, answer the following about the company's 

profitability: 

a. Calculate the ROA and ROE. 

b. Calculate the payout and plowback ratios. 

c. What effect will the plowback have on the company's growth in equity?

 

MULTIPLE CHOICE QUESTION

Which of the following may be the best measure of company performance?

 

Which of the following statements is true for a corporation with $1 million market value of 

equity, $2 million market value of assets, and 1,000 shares of outstanding stock?

 

Measures of a firm's efficiency with respect to earningWhich of the following expense categories is subtracted from total revenues to arrive at a 

firm's EBIT?s include:

 

Which of the following is correct?

 

 

 

 

 

 

 

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