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The firms marginal tax rate is 34 percent. Calculate the cost of (a) internal common equity and (b) external common equity. Please show your work.
Assume an 8 percent coupon rate. What effect does changing the coupon rate have on the firm's after-tax cost of capital?
Calculate present value if the discount rate is 12%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Decribe the information that should be disclosed in financial statements, or notes thereto, that are prepared when stock warrants are outstanding in the hands of three groups listed above.
Describe the principal-agent relationship. In your answer, give an example of how a principal-agent problem arises in the corporate world. Can such a problem become costly? Please explain.
The Easton manufacturing Company is looking to replace its conveyor belt system. A new system will cost $345,000, and will result in cost savings of $220,000 in the first year, followed by savings o
If dividends are expected to decline at 8 percent per year, what is a share of the stock worth today?
Project XYZ, requires an investment in equipment of $500,000 to replace existing equipment. The existing equipment will produce after-tax salvage value of $50,000. Net working capital requirements a
Suppose you borrowed $12,000 at a rate of 9% and must repay it in 4 equal installments at the end of each of the next 4 years. How much interest would you have to pay in the first year?
You earned 10.3 percent nominal rate over the past year, but find that your purchasing power in terms of real stuff you can buy with your money has increased only by 5.2 percent. What was the rate o
What your marginal federal tax rate? (What percent of your next dollar earned is lost via taxes?)
What is your average federal tax rate? (What percent of your gross income is lost via taxes?)
Imagine that your total gross income for the year is 103.6 thousand. After all the deductions and exemptions, you find that your taxable income is 84.4 thousand.
Assuming that you own only the Series A preferred stock (and that each share of all series of preferred stock is convertible into one share of common stock), what percentage of the firm do you own a
Absent transactions costs, what is the highest dividend tax rate of an investor who could gain from trading to capture the dividend?
A futures contract covers 5000 pounds with a minimum price change of $0.01 is sold for $31.60 per pound. If the initial margin is $2,525 and the maintenance margin is $1,000, at what price would the
Suppose that all capital gains are taxed at a 25% rate and that the dividend tax rate is 50%. Arbuckle Corporation is currently trading for $30 and is about to pay a $6 special dividend.
Natsam Corporation has $250 million of excess cash. The firm has no debt and 500 million shares outstanding with a current market price of $15 per share. Natsamâ's board has decided to payout
Initially Firm A has a beta of 1.3, when Rrf= 7 percent and Rm=12 percent. The firm now sells 10 percent of its assets (beta=1.2) and uses the proceeds to purchase another asset, a sanding machine,
Ace had 10 million in assets. It is consider a 40 percent debt/asset ratio vs. its current 20 percent debt/asset ratio. Debt arriews interest charges of 12 percent and shares sell for $20 per share.
Who are the remaining general creditors? How much will each receive from distribution before surodination adjustments? What is the effect of adjusting for subordination?
The company is funded 40% debt, 5% preferred, and 55% common equity. The tax rate is 40%. What is the company's WACC?
It is expected that Dylans Donuts could sell the equipment at the end of its expected life for $15,000. Dylans marginal tax rate is 30% and its required rate of return is 12%. Dylans has a minimum r
Make the calculations necessary to arrive at the correct figures for total contribution margin, contribution margin per unit, the contribution margin ration, and profit (or loss) with calculations.
An account earns 5% the first year, 7% the next 3 years, 8% the next 4 years and loses 3% each of the next 2 years.