Kid's Delight expects to sell $8,200 worth of toys in December, $3,700 worth in
January, $4,400 in February, and $6,100 in March. The wholesale cost is 72 percent of
the retail price. The firm has a receivables period of 30 days, a payables period of 60
days, and buys inventory one month prior to selling it. Which one of the following
statements is correct?
A. The February payments to suppliers are $2,992.
B. The March collections are $3,700.
C. The accounts receivable balance at the end of March is $4,400.
D. The purchases for February are $3,168.
E. The accounts payable balance at the end of January is $5,832.
The assets of Uptown Stores are currently worth $136,400. These assets are expected to
be worth either $120,000 or $150,000 one year from now. The company has a pure
discount bond outstanding with a $130,000 face value and a maturity date of one year.
The risk-free rate is 4.3 percent. What is the value of the equity in this firm?
The risk-free rate of return is 3.9 percent and the market risk premium is 6.2 percent.
What is the expected rate of return on a stock with a beta of 1.21?
A. 10.92 percent
B. 11.40 percent
C. 12.22 percent
D. 12.47 percent
E. 12.79 percent