Exhibit 8-1
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 46

Multiple Choice

Exhibit 8-1
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Assume that you are an analyst for the Canadian auto parts industry. Consider the following information that you propose to use to obtain an estimate of year 2010 EPS for the Canadian auto parts industry $\begin{array}{lcc}& \text { Year 2009 } & \text { Estimated Year 2010} \\\hline \text { Personal consumption expenditures } & \$ 6,800 \text {billion } \\\text {Personal consumption expenditures growth } &&1.5 \%\\\text {Industry Sales per share } &\$ 525\\\text { Industry Operating profit margin } &&15 \% \\\text {Industry Depreciation/Fixed Assets } &&8.25 \% \\\text { Industry Fixed asset turnover } &&3 \\\text {Interest rate } &&6 \% \\\text {Industry Total asset turnover } &&1.2 \\\text {Industry Debt/Total assets } &&45 \% \\\text { Industry Tax rate} &&36 \%\end{array}$
In addition a regression analysis indicates the following relationship between growth in industry sales per share and personal consumption expenditures (PCE) growth is
%D Sales per share = 0.02 + 1.5(%D PCE)
-Refer to Exhibit 8-1. Calculate industry level of debt for the year 2010.

• A) $215.58
• B) $300.75
• C) $237.67
• D) $285.98
• E) $193.72

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