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Rex Corp's EBITDA last year was $415,000 (= EBIT + depreciation + amortization), its interest charges were $10,000, it had to repay $25,000 of long term debt, and it had to make a payment of $20,000
The firm has the option to renew the loan at market rates. Alternatively, Wicker can sell 8.5 percent coupon bonds with a 2-year maturity and $1,000 par value at a price of $973.97. How many percent
What are the rates with continuous compounding? What is the forward rate for the six-month period beginning in 12 months (i.e., F12,18)? What is the value of an FRA that promises to pay you 5.0% (comp
Griswold allows its customers 40 days in which to pay for the batteries, and the firm pays its suppliers in 30 days. Under these conditions, what is the dollar amount of working capital Griswold mus
If the bonds sell in the market for $84, what is an estimate of the bankruptcy costs for the corporation? Assume a cost of debt of 10%.
One year ago, you purchased a stock at a price of $32.16. The stock pays quarterly dividends of $0.20 per share. Today, the stock is selling for $28.20 per share. What is your capital gain on this i
Slipshod Machine Tool Co. owes $40,000 to one of its suppliers. The supplier has offered a trade discount of 2/10 net 30. Slipshod can borrow the funds from either of two banks: First City Bank wil
The risk-free rate is 6 percent, the market risk premium is 5 percent, and the company's beta equals 1.2. What is the expected price of the stock five years from now?
Prepare in general journal form the budgetarty entry the debt service fund would make to account for this serial bond issue. what adjustmens,if any, would need to be made to the General Fund budget
Velcro Saddles is willing to pay $14 million cash for Pogo. The opportunity cost of capital is 8 percent. What is the gain from merger?
Duval Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Duval would have 600,000 shares of stock outstanding
Discuss the distributions of principal, interest, and the balance over the life of the loan. You must submit your backup in Excel or other supporting documentation showing how answers were reached.
Lorraine Jackson won a lottery. She will have a choice of receiving $25,000 at the end of each year for the next 30 years, or a lump sum today. If she can earn a return of 10 percent on any investme
Find the last 4 years' sales and profit or net income data for a major retail corporation. Calculate profit as a percentage of sales; be careful to place the decimal point correctly. Prepare a paragr
Caterpiller shares are currently priced at $58. You decide to buy 5 May 60 call options at a premium of $2.60. If Caterpiller shares rise to $64 by May, will you exercise? Ignoring commissions, what
Annual interest of 2.5% paid if balance exceeds $750, $8 monthly fee if account falls below minimum balance, average balance $815, account falls below $750 during 4 months.
Keenan Co. is expected to maintain a constant 6.0 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 4.0 percent, what is the required return on the company's
Dye Industries currently uses no debt, but its new CFO is considering changing the capital structure to 40.0% debt by issuing bonds and using the proceeds to repurchase and retire some common stock
Discuss three determinants of growth that you think should be most important for a corporation when engaging in financial planning.
Papers Inc. is expected to pay its first annual dividend five years from now. That payment will be $3.10 a share. Starting in year six, the company will increase the dividend by 2 percent per year.
ABC can sell 8.5% coupon bonds with a 2-year maturity and $1,000 par value at a price of $973.97. How many percentage points lower is the interest rate on the less expensive debt instrument?
Joachim Noah is investing $5,000 in an account paying 6.75 percent annually for three years. What is the interest-on-interest if interest is compounded?
Tucker's National Distributing has a current market value of equity of $10,665. Currently, the firm has excess cash of $640, total assets of $22,400, net income of $3,210, and 500 shares of stock ou
High Roller Properties is considering building a new casino at a cost of $10 million at t = 0. The after-tax cash flows the casino generates will depend on whether the state imposes a new income tax
An investment project provides cash inflows of $765 per year for eight years. If the initial cost is $2,400, the project payback period is ____years. If the initial cost is $3,600, the project payba