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There are no universally accepted definitions of financial ratios, but five of the following ratios are clearly incorrect. Substitute the correct definitions.
Your company can lease a truck for $10,000 a year (paid at the end of the year) for six years, or it can buy the truck today for $50,000. At the end of the six years the truck will be worthless. If
Suppose you receive $3,000 a year in years a year in years 1 through 4, $4,000 a year in years 5 through 9. If your discount rate is 12%, what is the present value of these cash flows?
He estimates his gross pay eah year for the next 3 years is $35.00 in 1 year, $21,000 in year 2, and $32,000 in year 3. What is the present value of these cash flows if they are discounted at 4%?
You are planning to make monthlydeposits of $70 into a retirement account that pays 6 percent interest compounded monthly.
Using the appropriate interest table, answer each of the following questions. (Each case is independent of the others.)
Compute the price of a share of stock that pays a $1- per-year dividend and that you expect to be able to sell in one year for $20, assuming you require a 15% return.
What is the future worth of an investment that starts at 1,000 in year one and increases by 10% per year for 20 years at a 10% interest rate.
The portfolio beta is 1.2. The risk-free rate is 5 percent and the market risk premium is 6 percent. What is the portfolio's required return?
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.)