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The balance sheet and income statement shown below are for Koski Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.

Balance Sheet (Millions of $) 2021
Cash and securities $ 4,200
Accounts receivable 17,500
Inventories 20,300
Total current assets $ 42,000
Net plant and equipment 28,000
Total assets $ 70,000
Liabilities and Equity
Accounts payable $ 27,531
Accruals 12,369
Notes payable 5,000
Total current liabilities $ 44,900
Long-term bonds 9,000
Total liabilities $ 53,900
Common stock 3,864
Retained earnings 12,236
Total common equity $ 16,100
Total liabilities and equity $ 70,000
Income Statement (Millions of $) 2021
Net sales $ 112,000
Operating costs except depreciation 104,160
Depreciation 2,240
Earnings before interest and taxes (EBIT) $ 5,600
Less interest 840
Earnings before taxes (EBT) $ 4,760
Taxes (25%) 1,190
Net income $ 3,570
Other data:
Shares outstanding (millions) 500.00
Common dividends (millions of $) $1,249.50
Int. rate on notes payable & L-T bonds 6%
Federal plus state income tax rate 25%
Year-end stock price $85.68

What is the firm’s profit margin? Do not round your intermediate calculations.

a. 8.00%
b. 3.19%
c. 5.10%
d. 3.43%
e. 5.00%


Suppose you borrowed $3,000 at a rate of 9.0% and must repay it in 4 equal installments at the end of each of the next 4 years. How large would your payments be?

a. $849.55
b. $926.01
c. $1,020.00
d. $1,058.69
e. $656.01


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