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27) If a firm has excess capacity when calculating AFN (Additional Funds Needed), A* will most likely equal which of the following?

A) Total assets B) Current assets C) Fixed assets D) Lumpy assets

28) The additional funds needed by the firm can be calculated by assuming which of the following?

A) The firm's additional sales will grow proportionately as assets are purchased. B) The firm's additional capital needed will grow proportionately with projected changes in sales. C) The firm's balance sheet will grow proportionately with projected changes in sales. D) The firm's additional sales will grow proportionately as capital is brought on to the balance sheet.

41) Tykes Toys zero coupon bond has 10 years until maturity and the bonds are selling in the market for $650. If the firm's after-tax cost of debt is 11 percent, what was the firm's tax rate?

A) 25.00 percent B) 30.00 percent C) 40.00 percent D) 250.00 percent

42) A firm uses only debt and equity in its capital structure. The firm's weight of equity is 35 percent. The firm's cost of equity is 14 percent and it has a tax rate of 30 percent. If the firm's WACC is 11 percent, what is the firm's before-tax cost of debt?

A) 13.41 percent B) 6.10 percent C) 5.50 percent D) 3.00 percent

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