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Suppose the 1-year copper forward price were $0.80 instead of $1. If XYZ were to sell forward its expected copper production, what is its estimated profit one year from now? Should XYZ produce coppe
Assume that the dollar is presently weak and is expected to strengthen over time. How will these expectations affect the tendency of U.S. investors to invest in the foreign securities.
Expected cash dividends are $2.50, the dividend yield is 6%, flotation costs are 4% of price, and the growth rate is 3%. What is the cost of new common stock?
He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent. How much will Jayadev have at the end of 45 years?
Find the present value of these ordinary annuities. Discounting occurs once a year.
The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV.
Torrid Romance Publishers has total receivables of $3000 which represent 20 days' sales.Average total assets are $75000. The firms operating profit margine is 5%. Find the firm's ROA and asset turn
The firm expects to operate the machine for 4 years and then to sell it for $12,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end
A firm issues a bond at par value. Shortly thereafter, interest rates fall. If you calculated the coupon rate, coupon yield, and yield to maturity for this bond after the decline in interest rates
Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV?
A chain of appliance stores purchases inventory with a net price of $500,000 each day. The company purchases inventory under the credit terms of 2/15, net 40. The company always takes the discount,
Company X is 60% debt-financed and the expected return on its debt is 6%. Its equity beta is 2. Risk-free rate of return is 4% and market risk premium is 4%. Assume a MM world with no taxes.
Revenues and other operating costs are expected to be constant over the project's 10-year expected operating life. What is the project's Year 4 cash flow?
What is the break-even point? What decisions does the break-even point help an organization make? What actions might an under performing organization take to reach the break-even point?
Revenues and other operating costs are expected to be constant over the project's 10-year expected life. What is the Year 1 cash flow?
A project has an initial outlay of $100,000. It has a single payoff at the end of year 4 of $200,000. What is the internal rate of return for the project (round to the nearest %)?
What is the chosen NPV versus the maximum possible NPV? Note that (1) ""true value"" is measured by NPV, and (2) under some conditions the choice of IRR vs. NPV will have no effect on the value
Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project's discounted payback?
M & M wood corp. uses no debt. The weighted average cost of capital is 9%. If the current market value of the equity is $ 23 million and there are no taxes, what is EBIT?
Briefly explain the pros and cons of financial leverage. In other words, what are its benefits, and what are the costs that come along with those benefits?
Explain in words the ROCE test for the advisability of adding leverage. That is, what is the test really telling us? When will it indicate a company is doing the wrong thing?
Explain the difference between a fixed and a variable cost. How do these concepts change as the time horizon lengthens?
The user of leverage might be thought of as taking advantage of the provider. Between stockholders and bondholders, who is the user and who is the provider?
The central issue underlying the study of leverage is whether or not it influences stock price and whether there's an optimal structure.
Both business risk and financial risk would exist with or without either type of leverage. Leverage just makes them more significant. Are these statements true or false?