The best time to get an ARM is when the market rates of interest are high

Indicate whether this statement is true or false.

Answer: TRUE

Business

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Discrete Discs Inc manufactures hard disk drives for personal computers. Discrete is an all equity firm. At the end of the current year, the CFO expects EBIT to be $10M and the same earnings are expected annually in perpetuity

The company is not growing so CAPEX and investments in net working capital are zero. The cost of equity for Discrete is 8%. Solid State Storage Inc is identical to Discrete except that it has $3M of long term debt outstanding. What is the value of Solid State's equity? The corporate tax rate is 30%. A) $84.5M B) $85.4M C) $87.5M D) $88.4M E) $122.9M

Business

Input price risk and output price risk are both a form of commodity price risk

Indicate whether the statement is true or false

Business