KMe clk Angwest RYERSON UNIVERSITY THE G. RAYMOND CHANG SCHOOL OF CONTINUIN EDUCATION MANAGERIAL FINANCE II CFIN 401, FALL 2011 FINAL EXAMINATION DECEMBER 12, 2011 Name | Student Number [QUESTIONS | MARK MARKS _|_ MINUTES Multiple-Choice 50 180 INSTRUCTIONS: 1) You are permitted to use 2 sides of 1 letter-sized page of formulas and a hand-held calculator. 2) Make sure that you properly fill in your computer answer scanner sheet. 3) You will not be given additional time to complete your scanner sheet. 4) Total 50 multiple-choice questions, 12 pages. Page | of 12. The primary goal of financial management is to: Maximize current sales. faximize the current value per share of the existing stock. ) Avoid financial distress. D) Minimize operational costs. E) Maintain steady earnings growth 2. The possibility of conflict of interest between the stockholders and management of the firm is called: A) The shareholders’ conundrum, Corporate breakdown. agency problem. )) Corporate activism E) Legal liability. 3. Agency costs are: A) The total dividends paid to shareholders over the lifetime of the firm, B) ‘The costs that result from default and bankruptey of the firm. C),Corporate income subject to double taxation. or costs of the conflict of interest between stockholders and management. Thi ie total interest paid to creditors over the lifetime of the firm. 4, A financial manager of a corporation is considering different operating strategies for the coming year. From a financial management standpoint, which of the following would be her optimal strategy? a Undertake the plan that would reduce the overall riskiness of the firm, Indertake the plan that would maximize the current stock price. ‘Undertake the plan that would result in the largest profits for the year. D) Undertake the plan that would maximize her personal wealth. E) Undertake the plan that would lead to the most stable stock price for the year. 5. The Board of Directors of Beeline, Inc. have decided to base the salary of its financial ‘manager entirely upon the market share of the firm. Accordingly, A) The firm may incur some agency costs since the manager will be focused on the market share of the firm rather than acting to maximize earnings. B) The financial manager will always act in the best interest of the shareholders since all agency costs have been eliminated through salary incentives. ©) This arrangement may be unnecessary, since the goal of the firm is to maximize gs for shareholders, and that is most likely accomplished through larger jarket share. e manager may not act to maximize the current value of the firm’s stock, resulting in agency costs for the firm's stockholders. E) The firm will incur some agency costs if the manager acts to maximize market, share, Page 2 of 12ost of capital in a firm that has both debt and equity 14 what a firm must earn on a project to compensate investors for the use of their funds. B) Depends on the source of the funds for a project. C) Is equal to the cost of debt or equity, depending on which type of financing the firm uses more. D) Is also known as the internal rate of return, E) Will be the same for its different divisions. 7. You need to calculate the cost of equity capital for a firm that is traded on the Toronto Stock Exchange. Which of the following would likely be least helpful to you? he rate of return on stocks of similar risk. e nowledge of the stock’s price six months ago. ‘An investment publication that provides an estimate of the firm's beta. D) An investment survey that projects future dividend growth rates for the firm. E) A data set containing dividends paid for the past 10 years. 8. Which of the following is NOT accurate regarding cost of equity capital estimates ated using the SML approach? ‘he SML applies only to firms with stable dividend growth rates. B) Like the dividend growth model, SML generally relies on using the past to predict the future. C)_ Unlike the dividend growth model, the SML estimate adjusts for risk. D) To implement this approach, the financial manager must estimate a market risk premium and a beta coefficient. E) The quality of the estimate using the SML approach is the estimates for the input variables in the model. sensitive to the quality of 9. A capital restructuring occurs when a firm: A) ncreases its debt-equity ratio while maintaining a constant debt-to-asset ratio, changes its debt-equity ratio without changing its total assets. © Reduces both its debt and its equity while maintaining a constant debt-equity ratio, D) Changes its level of debt without changing its total equi E) Refinances its debt at a lower rate of interest. 10. When choosing a capital structure, the objective of the firm should be to: ‘A)_ Choose the one that maximizes the current value of the firm's bonds. B) Choose the one that minimizes the value of the firm. g hhoose the one that minimizes the firm's WACC. Choose the one that results in the largest interest tax shield. E) Choose any capital structure since it is always irrelevant. Page 3 of 1211, Allelse the same, the financial leverage of a firm will - Decrease as the debvequity ratio increases. ©) p jecrease as the firm's retained earnings account grows. \crease by the amount of equity it issues in a given year. D) Decrease if the firm has negative net income. E) Decrease as the firm uses debt to fund expansion projects. 12. The party to a lease that owns an asset but does not use the asset is called the: A) Manufacturer. B) yLessee. cessor. D) Transferor. E) Transferee. 13. An operating lease is defined as a lease under which the ___ is usually responsible for the maintenance, insurance, and taxes. Short-term; lessee ‘Short-term; lessor ‘) Long-term; lessee D) Long-term; lessor E) Long-term; guarantor 14. Which one of the following should be included in a lease-purchase analysis? I. The amount of the lease payment II, The cost of the asset if purchased today IIL. The amount of the depreciation tax shield IV. The amount of the benefit to be derived from the use of the asset A) Land Il only B) and Ill only Rand IV only @ 1,Ny, and III only F) 1, Il, and IV only 15. A corporation’s first sale of equity made available to the public is called a (n): A) Share repurchase program. B) Self-registration filing C) Private placement. D) Seasoned equity offering (SEO). Initial public offering (IPO). Page 4 of 1216. A public offering of securities where existing shareholders of the firm have the first opportunity to buy new securities, exclusive from the general public, is called a: A) Best efforts offer. B) Firm commitment offer. \General cash offer. ights offering. Red herring offer. Use the following to answer questions 17 to 21: Classique, Inc., a manufacturer of reproduction parts for classic automobiles, needs to raise $2 million via a rights offering. The subscription price is $2 per share. The firm currently has 2 million shares outstanding, and the current market price per share is $6. 17. How many rights are required to purchase one share? i C4 D)5 E) 10 18, What is the value of a right? A) $0.75 B) $0.98 $1.17 $1.33 35.99 19. What is the ex-rights price of the firm’s stock? $2.00 OS $4.83 D) $5.25 E) $6.00 20. What the firm be worth following the rights offering? 12.00 million 4.00 million ©) $15.25 million D) $16.50 million E) $18.00 million Page 5 of 1221. Assume that Classique decides to set the subscript ‘Now what will the value of a right be? (Assume all other information remains the C) $0.80 D) $1.20 E) $2.50 22. A policy under which the firm pays dividends only after its capital investment needs are met, and while maintaining a constant debUequity ratio, is called a A) Homemade dividend B) Clientele effect 8 esidual dividend approach Bird-in-the-hand approach E) Constant dividend growth model 23. Ina reverse stock split, ‘A) The number of shares outstanding increases and owners' equity decreases. B) The firm buys back existing shares of stock on the open market. ‘The firm sells new shares of stock on the open market. @ \The number of shares outstanding decreases, but owners’ equity is unchanged. Shareholders make a cash payment to the firm, just the opposite of a cash dividend. 24, DRK, Inc. currently has 400,000 shares of stock outstanding, with a market price of $20 and a par value of $2. The firm would prefer to have its stock trade at a value between $30 and $35 per share. Of the following choices, which would allow the firm to achieve its objective? A). A 2-for-I stock split 400,000 ¥ oo= 5 50% stock dividend © 2-for-3 reverse stock split {OO O00 ¥ 3/9 20 bd. b> A 1-for-2 reverse stock split = 6 E) A $2 per share cash dividend & M ! ° bb ibe? ~ v 25. You own stock in a firm that has 1.25 million shares outstanding. The current stock price is $13.50 per share. If the company issues a 10 percent stock dividend, what 6 id you expect the stock price to be after the dividend is paid? 12.27 $12.82 ©) $13.30 D) $13.49 FE) $13.71 Page 6 of 1226. A firm has 200,000 shares of stock outstanding, with a market value per share of $15. In addition, on the balance sheet there is common stock of $1,950,000 and retained earnings of $1,450,000. Suppose the firm declares a 20 percent (small) stock dividend. What happens to the common stock account on the balance sheet? Assume there are no taxes or transaction costs? ‘A) The account remains unchanged. B) The account increases by $200,000. The account increases by $400,000. The account increases by $600,000. E) The account decreases by $500,000. Use the following information to answer questions 27 and 28: Homer, Ine. is expected to pay dividends of $100 per share at the end of one year and $100 at the end of the second year. The dividend in the second year is a liquidating dividend and the firm will cease to exist. Investors require a 12 percent return on investments of this type. There are 100 shares of stock outstanding. The firm is considering an alternative dividend policy that will pay out $120 in dividends per share in the first year. Under the alternative plan, any shortfall in funds will be raised by selling new equity. There are no taxes, transaction costs, or other market imperfections. 27. What is Homer’s stock price before the alternative dividend plan is adopted? A) $164.26 NS16273 © 169.01 $172.54 E) $176.24 28 What will be Homer’s stock price once the alternate dividend plan is adopted? A) $164.26 B) \ $167.73 Q\sis0i $172.54 E) $176.24 29. You buy 15 wheat futures contracts when the price is $2.61 per bushel (each contract is for 5,000 bushels). The price on the maturity date sma yon isyouk, \ ) rT? = - BSE co0 \S x So000x Co \ 2 B) -$2,000 - Ss = : Os =1IS¥ 5.400% D) $2,000 = Co ,0ee) E) $30,000 = Page 7 of 1230. You sell 10 gold futures contracts when the futures price is $342.70 per ounce (each contract is for 100 ounces). The price on the maturity date is $302.30. What is your payoff? A) -$40,400 B) -$4,040 ©) $404 $4,040 (ibaa 31. You, purchased a May American call option on Netscape stock with an exercise price 5. Which of the following statements is true? Gre have the right to buy Netscape shares for $165 at any time prior to the Option expiration, regardless of the stock’s market price. B) You are obligated to buy Netscape shares for $165 when the option expires in May, regardless of the stock’s market price. C) You have the right to sell Netscape shares for $165 at any time prior to the option expiration in May, regardless of the stock’s market price. D) You are obligated to sell Netscape shares for $165 when the option expires in May, regardless of the stock’s market price. E) You have the right to buy Netscape shares for $165 at any time prior to the option expiration in May, but only if the stock’s market price is less than $165. Use the following information to answer questions 32 to 35: Option OutTel Call Put Share | Strike Exp. Vol. Last Vol. Last Price 25 20.0 Jan. | _101 6 o 1 23 20.0 Feb. 79 7 34 25 2.5 Mar. 6 3 4 [4 32. You want to purchase one February call contract option on the stock. The contract with a $20 exercise price will cost you (Ignore transactions costs.) A) $100 = B) $200 Vy losyVa yoo ©) $500 $600 GNi0 33. What is the intrinsic value per share of the January call? A) $0.00 c = $1.00 QS-a05 O o 5.00 D) $6.00 E) $7.00 Page 8 of 1234, What is the time value per share of the January call? Ne b-S> D) $6.00 E) $7.00 35. Which of the options shown in the quotes are in the money? 1. The January 20 call HL. The February 20 call IIL The February 20 put Varhe March 22 % put AMand 11 only Qos I only ©) Land IV only D) Hand Ill only E) Illand IV only 36. John and Randy form a company with assets worth $900. They each have two shares of stock. The firm sells Cheri a warrant for one share of stock. The warrant has an exercise price of $200 and expires in one year. In one year, the firm’s. ~ assets are worth $1,200 immediately before the expiration of the warrant. Should Cheri exercise the warrant? A) No, because the option is out of the money. g\s because she stands to gain $40 by exercising. ) es, because she stands to gain $80 by exercising. Yes, because she stands to gain $100 by exercising E) We can’t tell without knowing what she paid for the warrant. 37. Which of the following statements are correct? 1. The strike price is the price the owner of a call pays per share to purchase shares of stock. \ Il. The expiration date is the only date the owner of a European option can exercise the option e Ill, Warrants generally have longer maturity dates than options. \ IV. The seller of a put agrees to purchase shares of stock if the option is exercised. A) Land Ionly B) Hand IV only C) LU, and Ill only Diy I, and 1V only 1,11, 1H, and 1V Page 9 of 12Use the following information to answer questions 38 to 41: Maturity: 10 years Face value: $1,000 Conversion price: $65 Stock price at issue: S45, Annual coupon: $80 YTM on similar non-convertibles: 7.5% 38. What is the conversion ratio? A) 98 123 15.4 D) 16.7 E) 22.2 39. What was the conversion premium at issuance? A) 16.67% B) 30.80% C) 33.33% D) 38.25% Wass 40. What is the straight bond value? A) $778.43 B) $86739 ©) $939.00 Dy $983.64 $1,034.32 41. What is the conversion value if the current stock price is $69.50? A) $778.43 B) $867.39 C) $939.00 1D), $1,034.32 1,070.30 42. What is the minimum value of this bond if the current stock price is $69.50 per share? A) $778.43 B) $867.39 ) $939.00 D),$1,034.32 1,070.30 Page 10 of 1243. Which of the following statements is false? ‘A) Market values should be used to determine the value of a firm. B) In calculating the value of a merger ot acquisition only incremental cash flows should be considered. C) The cost of capital for the target firm is generally considered to be the relevant discount rate associated with a merger or acquisition. 1D) Transaction costs should be included when calculating the value of a merger. g ‘here will typically be a gain in an acquisition if the target firm's management is better than the management of the acqui \g firm. 44. A successful merger requires that the: A) P/E ratio maintains its pre-merger value. B) Debt-equity ratio of the firm remains at its pre-merger level. C) Book value per share must remain constant. D),Book value per share must increase. falue of the whole exceeds the value of the sum of the parts. Use the following to answer questions 45 to 48: Neither acquiring firm A nor target firm B has any debt. The incremental value of the proposed acquisition is estimated to be $250,000. Firm B is willing to be acquired for $30 per share in cash. Firm A Firm B Number of Shares 50,000 18,000 Price per Share $50.00 $22.50 45, What is the merger premium per share in this case? A) $0 B){ $2.50 7.50 Dy $10.00 E) $30.00 46. What is the value of firm B to firm A? A) $138,000 B) $250,000 hy$405,000 655,000 E) $920,000 47. What is the NPV for aca Ad, Ne NPV is negative $115,000 $160,000 D) $235,000 E) $260,000 Page 11 of 1248, What is the price per share of the merged firm after the acquisition is completed? 50.00 52.30 C) $56.46 D) $58.76 E) $61.24 Use the following to answer questions 49 to 50: Firm A can acquire firm B for $120,000 in cash or in shares of firm A stock. ‘The synergy value is $36,000. FirmA — FirmB Number of Shares 10,000, 8,000 Price per Share $21.00 $11.00 49. What is the value of th yst-mer firm if the mye y an all, deal? A) $126,000 WweV2 NOOO RV) ee Get — 150, 068 B) $142,000 $178,000 ~ eee 046 - \o0006 $214,000 = B) $334,000 = & oo 21) a Mano 2 HO Value (10,060¥ aAVE00 aoe 50. What is the value of the post-merger firm jhe merger * all stock deal? hh a) si7got) GO, O00 lye Yoo en reel $334,000 Copoe YS ec AN NK D) $404,000 E) $454,000 06 4b 00% = 10,000 + $60 a 334,009 Page 12 of 121. The primary goal of financial management is to: A Younes current sales. imize the current value per share of the existing stock. ) Avoid financial distress. D) Minimize operational costs. E) Maintain steady earnings growth. 2. The possibility of conflict of interest between the stockholders and management of the firm is called: A) The shareholders’ conundrum. B) Yorporate breakdown. NX x ‘agency problem, D) Corporate activism. E) Legal liability 3. Agency costs are: ‘A) The total dividends paid to shareholders over the lifetime of the firm, B) The costs that result from default and bankruptcy of the firm. ChxCorporate income subject to double taxation. 1¢ costs of the conflict of interest between stockholders and management. F) The total interest paid to creditors over the lifetime of the firm, 4. A financial manager of a corporation is considering different operating strategi for the coming year. From a financial management standpoint, which of the following would be her optimal strategy? indertake the plan that would reduce the overall riskiness of the firm. \ CB) Mndertake the plan that would maximize the current stock pric ‘Undertake the plan that would result in the largest profits for the year. D) Undertake the plan that would maximize her personal wealth. E) Undertake the plan that would lead to the most stable stock price for the year. 5. ‘The Board of Directors of Beeline, Inc. have decided to base the salary of its financial manager entirely upon the market share of the firm. Accordingly, A) The firm may incur some agency costs since the manager will be focused on the market share of the firm rather than acting to maximize earnings. B) The financial manager will always act in the best interest of the sharcholders since all agency costs have been eliminated through salary incentives. ©) This arrangement may be unnecessary, since the goal of the firm is to maximize earnings for shareholders, and that is most likely accomplished ahah ager market hae NB Whe manager may not act to maximize the current value of the firm's stock, esulting in agency costs for the firm's stockholders. E) The firm will incur some agency costs if the manager acts to maximize ‘market share Page 2 of 1014. A public offering of securities where existing shareholders of the firm have the first opportunity to buy new securities, exclusive from the general public, is called a: A) Best efforts offer. B) Firm commitment offer. £4 General cash offer. wre offering, Red herring offer. Use the follo 1g to answer questions 15 to 19: Classique, Inc., a manufacturer of reproduction parts for classic automobiles, needs to raise $2 million via a rights offering. The subscription price is $2 per share. The firm currently has 2 million shares outstanding, and the current market price per share is $6. 15. How many rights are required to purchase one share? 1 \@)2 4 D) 5 B) 10 16, What is the value of a right? A) $0.75 B) $0.98 Qo 1.33 E) $5.99 17. What is the ex-rights price of the firm’s stock? 52.00 54.67 D) $5.25 B) $6.00 18, What will the frm be worth following the rights offering? $12.00 million $14.00 million DOG 1525 miition D) $16.50 million B) $18.00 milion Page 5 of 106. A firm plans to split its stock 2-for-1. Which of the following most likely will NOT occur? Par value per share will be reduced by half \ @ Total shareholders’ equity will be reduced by half, Price per share will fall by hal. D) The number of shares outstanding will double. ) The number of shares owned by each individual investor will double, LA sometimes undertaken by a firm that wishes to make its stock price more appealing to the average investor. 1. Extra cash dividend IL Stock dividend II. Reverse stock split A) ILonly B) [and Il only Land IIL only Hand Il only I, Hl, and Il 8. You own stock in a firm that has 1.25 million shares outstanding. The current stock price is $13.50 per share. Ifthe company issues a 10 percent stock \ Gas ns in woul you is or ws price, wou after ogiite ispai 3 $12.82 Euhe 275 4 388 BE cher eS 1205 B sin 1aSV 110 © \3a7 9. A firm has 200,000 shares of stock outstanding, with a market value per share of $15. In addition, on the balance sheet there is common stock of $1,950,000 and retained earings of $1,450,000. Suppose the firm declares a 20 percent (small) stock dividend, What happens to the common stock account on the balance a sheet? Assume there are no taxes or transaction costs? ‘A). The account remains unchanged. B) {The account increases by $200,000. 06,000 yo xX (ie accoumt increases by $400,000 \ account increases by $600,000. 1S The account decreases by $500,000 00,000 Page 3 of 10a) 10, You own stock ina firm that has 1.25 million shares outstanding. The current Jock price 1s $13.30 per share. Ifthe company does a3-for-1 stock split, what vould you expect the stock price to be after the spit?) — x S> \b. $29 aa LOM x \O™S, \osmx 3 = SAS E) $40.50 _ se Use the following information to answer questions 11 and 12: Homer, Inc. is expected to pay dividends of $100 per share at the end of one year and $100 at the end of the second year. The dividend in the second year is a liquidating dividend and the firm will cease to exist. Investors require a 12 percent return on investments of this type. There are 100 shares of stock butstanding, The firm is considering an alternative dividend policy that will pay out $120 in dividends per share in the first year. Under the alternative plan, any shortfall in funds will be raised by selling new equity. There are no taxes, transaction costs, or other market imperfections. 11. What is Homer's stock price before the alternative dividend plan is adopted? A) $164.26 $167.73 169.01 a D) $172.54 \oo oo $176.24 Prat. loo n= 1=)9 pam FEVA2 0 ork fh ° 12. What willbe Home's stock prie gfe alternate dividend plan is adopted? A) $164.26 ‘= \, $167.73 Ve lo C & oO $169.01 Ganrbe > D) $172.54 5) sia FV ne! \Oa 121D PMT=0 13. A corporation's first sale of equity made available to the public is called a(n): 'A) Share repurchase program. © B) Self-registration filing. ©) Private placement. D) Seasoned equity offering (SEO). initial public offering (IPO). Page 4 of 1019, Assume that Classique decides to set the subscription price at $4 rather than ‘$2, Now what will the value of a right be? (Assume all other information remains the same.) $0.25 \@ioae ) $0.80 D) $1.20 E) $2.50 20, You sell 10 gold futures contracts when the futures price is $342.70 per ounce (each contract is for 100 ounces). The price on the maturity date is $302.30. What is your payoft? JA) $40,400 B) -$4,040 ©) $404 $4,040 \ (@)s40.400 21, You purchased a May American call option on Netscape stock with an exercise A. Pape OL SIGS: Which ofthe following atemen's is true? “AJ You have the right to buy Netscape shares for $165 at any time prior to the option expiration, regardless of the stock's market price. B) You are obligated to buy Netscape shares for $165 when the option expires in May, regardless of the stock's market price. ©) You have the right to sell Netscape shares for $165 at any time prior to the ‘option expiration in May, regardless of the stock’s market pric. 1D) You are obligated to sell Netscape shares for $165 when the option expires in May, regardless of the stock’s market price. E) You have the right to buy Netscape shares for $165 at any time prior to the option expiration in May, but only ifthe stock’s market price is less than $165. Page 6 of 1027. Which of the options shown in the quotes are in the money? 1. The January 20 call IL. The February 20 call IIL. The February 20 put The March 22 % put and Il only 1 and IM only ©) Land IV only D) [and 111 only B) Ill and IV only 28. John and Randy form a company with assets worth $900. They each have two shares of stock. The firm sells Cheri a warrant for one share of stock. ‘The warrant has an exercise price of $200 and expires in one year. In one ‘year, the firm’s assets are worth $1,200 immediately before the expiration of the warrant. Should Cheri exercise the warrant? A) No, because the option is out of the mone 6 Yes, because she stands to gain $40 by exercising. N Yes, because she stands to gain $80 by exercising Yes, because she stands to gain $100 by exercising. E) We can’t tell without knowing what she paid for the warrant, Use the following information to answer questions 29 to 33: Maturity: 10 years Face value: $1,000 Conversion price: $65 Stock price at issue: $45 Annual coupon: $80 YTM on similar non-convertibles: 7.5% 29. What is the conversion ratio? A) 9.8 123 a wis D) 16.7 E) 22.2 30, What was the conversion premium at issuance? @S A) 16.67% Page 8 of 1031. What is the straight bond value? B) $867.39 Gg C) $939.00 D) $983.64 ‘oO $1,034.32 32. What is the conversion value if the current stock price is $69.50? A) $778.43 B) $867.39 C) $939.00 4) $1,034.32 \@)s1.07030 33. What is the minimum value of this bond if the current stock price is $69.50 per share? A) $778.43 B) $867.39 1c) $939.00 1,034.32 1,070.30 34. Which of the following refer to synergistic gains from merger due to revenue enhancement? 1. Marketing gains IL, Strategic benefits UL. Unused debt capacity IV. Surplus funds Tand Il only’ Mand 1V only 1,1, and HI only D) I, I, and IV only E) i, I, and IV only 35. Which of the following is a correct statement? ‘A) _ EPS growth cannot occur as the result of an acquisition. B) EPS growth cannot occur from an acquisition unless it creates no additional value. Stockholders can achieve diversification on their own. Diversification is usually beneficial in a merger because it reduces systematic risk. E) Diversification, by itself, is one reason that value may be created in a merger. Page 9 of 10Use the following to answer questions 36-4 Neither acquiring firm A nor target firm B has any debt. The incremental value of the proposed acquisition is estimated to be $250,000. Firm B is willing to be acquired for $30 per share in cash. FirmA — FirmB Number of Shares 50,000 18,000 Price per Share $50.00 $22.50 36. What are the synergistic benefits that arise from the acquisition of firm B? $138,000 \® $250,000 $405,000 D) $655,000 E) $920,000 37, What is the merger premium per share in this case? A) $0 $2.50 GB $7.50 D) $10.00 E) $30.00 38. What is the value of firm B to firm A’? A) $138,000 B) $20,000 $405,000 $655,000 $920,000 39, What is the NPV for acquiring firm B? ‘The NPV is negative (B) $115,000 $160,000 m" D) $235,000 E) $260,000 40. What is the price per share of the merged firm after the acquisition is completed? $50.00 $52.30 ©) $56.46 D) $58.76 B) $61.24 Page 10 of 10