1. Beer Brothers Inc. forecasts that its year-end assets will be $3,000, its sales will be $3,500, its operating costs will be $2,650, its interest charges will be $100, and its tax rate will be 40%. Its total current liabilities are $250 consisting of $60 of accruals and $190 of notes payable. Its long-term debt is $950. Beer's capital structure consists of only debt and common equity. What is Beer's forecasted total assets turnover?
a. 1.17 b. 1.29 c. 1.42 d. 1.56 e. 1.71
2. 5-year Treasury bonds yield 4.4%. The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on 5-year T-bonds is 0.4%. There is no liquidity premium on these bonds. What is the real risk-free rate, r*?
2.10% 2.39% 2.21% 2.58% 1.91%