Bridget's Midget Widget

Gross Profit has:

• A.Increased over the period because cost of goods sold has increased less rapidly than sales.
• B.Decreased in dollars, but increased as a percent of sales.
• C.Decreased over the period.

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Watson is planning to value Alcan, Inc for the year of 2004. The financial information Watson has assembled for his valuation is as follows (in millions):
EBIT: 500.
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Interest expense: 150.
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Depreciation: 200.
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Income tax rate: 35%.
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Investment in working capital: 80.
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Investment in fixed capital: 400.
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What is the FCFF for the company?

• A.$45 million.
• B.$220 million.
• C.-$285 million.

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What is the duration estimate of the dollar price change for a 7%, 5-year bond with a duration of 4.158, selling at 100, when the yield changes by 1 basis point?

• A.0.04158
• B.0.2915
• C.4.158

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Taking financial reports to evaluate the past, current and prospective performance and financial position of a company for the purpose of making investment, create and other economic decisions best describes the role of

• A.Financial reporting.
• B.Financial statement analysis.
• C.Financial statements.

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For investments made by banks, the risk tolerance is typically ______ and the liquidity needs are typically ______.

• A.low, low.
• B.high, low.
• C.low, high.

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