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An unlevered firm has a value of $500 million. An otherwise identical but levered firm has $50 million in debt. Under the MM zero-tax model, what is the value of the levered firm?
An unlevered firm has a value of $800 million. An otherwise identical but levered firm has $60 million in debt. Assuming the corporate tax rate is 35%, use the MM model with corporate taxes to deter
What is the most appropriate form of ownership for an aggressive entrepreneurial firm? The ownership choices are sole proprietorship, partnership, corporations or limited liability.
The Klaven Corporation had operating income (EBIT) of $750,000 and depreciation expense of $200,000. What are net income, net cash flow, and operating cash flow?
Pearson Brothers recently reported an EDITDA of $7.5 million and net income of $1.8 million. It had $2.0 million of interest expense, and its corporate tax rate was 40 percent. What was its charg
Sam Johnson invested in gold U.S coins ten years ago, paying $216.53 for one ounce gold double eagle coins. He could sell these coins for $ 734 today. What was his annual rate of return for this
An otherwise identical but levered firm has $240 million in debt. Under the Miller model, what is the value of the levered firm if the corporate tax rate is 34%, the personal tax rate on equity is 1
In January 1994, Harold Black bought 100 shares of Country Homes for $37.50 per share. He sold them in January, 2004 for a total of $9,715.02. Calculate Harold's annual rate of return.
Zhao Automotive issues fixed-rate debt at a rate of 7.00%. Zhao agrees to an interest rate swap in which it pays LIBOR to Lee Financial and Lee pays 6.8% to Zhao. What is Zhao"s resulting net paymen
What is a Eurodollar? If a French citizen deposits $10,000 in Chase Bank in New York, have Eurodollars been created? What if the deposit is made in Barclays Bank in London?
What is the expected rate of return (i.e., the before-tax component cost) on the proposed convertible issue?
During the yr he received dividendsof $1.45 per share. the stock is currently selling for $60per share. What rate of return did Mike earn over year?
The bond pays $30.00 every six months. The current market interest rate is 8%. What is the most you would be willing to pay for this bond?
Does the convertible issue"s lower coupon rate suggest that it is less risky than the straight bond? Is the cost of capital lower on the convertible than on the straight bond? Explain.
An interest rate of 13% per year compounded monthly is equivalent to what effective interest rate per year?
What coupon interest rate, and dollar coupon, must the company set on the bonds with warrants if they are to clear the market? (Hint: The convertible bond should have an initial price of $1,000.)
If a firm expects to have additional financial requirements in the future, would you recommend that it use convertibles or bonds with warrants? What factors would influence your decision?
Distinguish between operating mergers and financial mergers.
What will be the fair market price of a 5 year, $1000 par value bond that makes semi-annual payments, and has a coupon rateof 8%, and offers a yield to maturity of 7%.
If interest is compounded continuously at a nominal rate of 11%, determine the present value of this continuous cash flow.
The firm will also incur expenses in the amount of $150,000. How many shares must the firm sell to net $20 million after underwriting and flotation expenses?
The product's salesprice is $4.00. What is the company's breakeven point; that is, at what unit sales volume would its income equal its costs?
If the firm did not take discounts but it did pay on the due date, what would be its average payables and the cost of this non free trade credit?
The dividend is expected to grow at a constant rate of 6% a year. What stock price is expected 1 year from now? What is the required rate of return?
Thompson purchases under terms of 2/10, net 30, but it can delay payment for an additional 35 days-paying in 65 days and thus becoming 35 days past due-without a penalty because of its suppliers" cu