1. The most commonly used measure of what an investment generates, which is the compound rate that equates the present value of future cash flows with the initial investment is _______.
a. operating cash flow (OCF)
b. internal rate of return (IRR)
c. return on assets (ROA)
d. free cash flow to equity (FCFE)
2. Papa Roach Exterminators, Inc., has sales of $664,000, costs of $345,000, depreciation expense of $37,000, interest expense of $23,000, and a tax rate of 40 percent. If the firm paid out $73,000 in cash dividends. What is the addition to retained earnings?
$119,400
$142,400
$74,160
$105,400
$82,400