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Three states of the economy are possible: a slump under which the firm would have operating income of $150,000, a normal state under which the firm will earn $420,000, and a boom under which the fir
The current stock price is $21.00 per share; stockholders' required return, rs, is 14.00%; and the firm's tax rate is 40%. The CFO thinks the WACC should be based on market value weights, but the pr
Simply Red inc has a return on equity of 14%, a dividend payout ratio of 40% an equity multiplier of 2.5 and a profit margin of 1.4%. What is the internal growth rate?
A firm has current assets which could be sold for their book value of $10 million. The book value of its fixed assets is $60 million but they could be sold for $95 million today. The firm has total
Discuss how to calculate the expected return and volatility for a portfolio of stocks,and how an investor can create an efficient portfolio?
ElectricEye Technologies is considering introducing a new line of optic devices. The expected annual sales number of the devices is 10,000 per year; the price is $5,000 per device, and the ariable c
Allegheny Valley Power Company common stock has a beta of 0.80. If the current risk-free rate is 6.5% and the expected return on the stock market as a whole is 16%, determine the cost of retained ea
State Street Corp. will pay a dividend on common stock of $ 4.80 per share at the end of the year. The required return on common stock (Ke) is 13.2%. The firm has a constant growth rate of 7.2%. Co
Stain Corp. has forecasted that over the next four years the average annual after-tax income will be $500,731. The average book value of the manufacturing equipment that is used is $737,095. What is
If it could get the funds from abank at a rate of 10 percent, interest paid monthly, based on a365-days year, what would be the effective cost of the bank loan,and should Lamar use bank debt or addi
Great Pumpkin Farms just paid a dividend of $3.50 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely. Investors require a 16 percent return on th
The 9 percent preferred stock of New Beverages is selling for $39 a share. What is the firm's cost of preferred stock if the tax rate is 35 percent and the par value per share is $100?
Austin Grocers recently reported the following 2008 income statement (in millions of dollars): Sales $700 Operate ring cost including depreciation 500 EBIT 200 Interest 40 EBT $160 Taxes
Digby's Elite product Dim has an awareness of 72%. Digby's Dim product manager for the Elite segment is determined to have more awareness for Dim than Andrews' Elite product Alan.
What are the basics principles to keep in mind in mergers and acquisitions planning? In evaluating an individual merger or takeover, why is it useful to start with an analysis of the business economi
Which of the following has the greatest interest rate price risk?
The pecking order states how financing should be raised. In order to avoid asymmetric information problems and misinterpretation of whether management is sending a signal on security overvaluation
Over the last four years, the stock of Wagner's Paints has had an arithmetic average return of 6.5 percent. Three of those four years produced returns of 9 percent, 3 percent, and - 1 percent. What
What is the economic ordering quantity? How many orders will be placed during the year? What will the average inventory expected to be? What is the total cost of inventory expected to be?
Simon Fixtures Corp. is expected to pay $2.00 per share in dividends at the end of the next 12 months. The growth rate in dividends is expected to be constant at 8% per year. If the stock is sellin
Cash conversion cycle Primrose Corp has $15 million of sales, $2 million of inventories, $3 million of receivables, and $1 million of payables. Its cost of goods sold is 80 percent of sales, and it
Obtain the closing price, the change in price from the previous day, and the beta. Calculate the return on holding the stock for a day (this should be the change in price over the closing price).
Discuss the role of central banks, such as the Federal Reserve in the United States, to provide economic growth and stability. Differentiate between the roles of various financial institutions within
Construct two alternative financing plans for Guardian. One of the plans should be conservative, with 70 percent of assets financed by long-term sources, and the other should be aggressive, with onl