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What is a contingent liability? Why are contingent liabilities accounted for differently than contingent assets?
Discuss the various types of bonds and how they are used to raise funds by public and private institutions and why is each type of security used.
The current profit margin is 5% and the firm uses no external financing sources. What must total asset turnover be?
Levine Inc. is considering an investment that has an expected return of 15% and a standard deviation of 10%. What is the investment's coefficient of variation?
Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $936.05. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $1,048
Rudolf Corp.'s stock price is $20 per share, and its expected year-end dividend is $2 a share (D1 = $2.00). The stock's required return is 15%, and the dividend is expected to grow at a constant ra
Evaluate the impact interest rates have on bond valuation, other economic factors that affect bond prices and rates of return.
Binder Inc's stock has a required rate of return of 10%, and it sells for $40 per share. Binder dividend is expected to grow at a constant rate of 7% per year. What is the expected year-end dividen
If James withdrew $4,000 during the year and invested an additional $17,000 in the business, what was the amount of net income earned by Josephine's Bakery?
Fay-Mart reported net income of $19,500 for the previous year. At the beginning of the year the company had $300,000 in assets. By the end of the year, assets had increased by $100,000. Calculate t
The following are costs associated with manufacturing firms, merchandising firms, or service firms:
What is the internal rate of return for an investment with the following cash flows? Remember to net the flows of each year.
Bonn Corporation's bonds have a 15-year maturity, a 7% semiannual coupon, and a par value of $1,000. The annual interest is 6%, based on semiannual compounding. What is the bond's price?
The firm paid $3,605 in total interest expense and deducted $2,382 in depreciation expense. What was the cost coverage ratio for the year?
Munich AG's outstanding bonds have a $1,000 par value, and they mature in 5 years. Their yield to maturity is 9%, based on semiannual compounding, and the current market price is $853.61. What is th
Local Co. has sales of $10 million and cost of sales of $6 million. Its selling, general and administrative expenses are $500,000 and its research and development is $1 million. It has annual depre
A 6.25% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 4.75%, based on semiannual compounding. What is the bond's price?
An individual has $35,000 invested in a stock which has a beta of 0.8 and $40,000 invested in a stock with a beta of 1.4. These are the only two investments in what is the portfolio's beta?
Schism, Inc., has a total debt ratio of 0.70, total debt of $265,000, and net income of $24,850. What is the company's return on equity?
SDI, Inc., has net working capital of $1,350, current liabilities of $4,290, and inventory of $1,820. What is the current ratio? What is the quick ratio?
Rolston Recording has total assets of $10,500,000 and a total asset turnover of 2.10 times. If the return on assets is 13 percent, what is its profit margin?
Quisco Systems has 6.5 billion shares outstanding and a share price of $18.00. Quisco is considering developing a new networking product in-house at a cost of $500 million. Alternatively, Quisco can
Irrational, Inc., is obligated to pay its creditors $7,500 during the year. What is the value of the shareholders' equity if assets equal $8,700?
Financial ratio analysis is conducted by managers, equity investors, long-term creditors, and short-term creditors. What is the primary emphasis of each of these groups in evaluating ratios?
Explain why the quick ratio or acid-test ratio is a better measure of a firm's liquidity than the current ratio.