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What is the expected value of unit sales for the new product? What is the standard deviation of unit sales?
Discuss the capital formation as it relates to the business form and the life cycle of businesses
Assuming that sales, operating costs, assets, the interest rate, and the tax rate would all remain constant, by how much would the ROE change in response to the change in the capital structure? &nb
What is his total loss in value over the three months on the actual oats he produced and took to market? How much did his hedge in the futures market generate in gains? c. What is the overall net los
What is the net asset value of the fund? What is the current price of the fund? Suggest two reasons why the fund may be trading at a discount from net asset value.
If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 8.5%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero l
Consider a futures contract to purchase a coupon-bearing bond whose current price is $875. The futures contract matures in 15 months and the bond matures in 4 years. The bond holder receives an annu
Now assume the firm issues $1 million of debt paying interest of 4% per year, using the proceeds to retire equity. The debt is expected to be permanent. What is the equity value of the firm after r
Consider a coupon bond that has a $1000 par value and a coupon rate of 10%. The bond is currently selling for $1150 and has eight years to maturity. What is the bond's yield to maturity?
Howard Contracting recently completed a 3-for-1 stock split. Prior to the split, its stock price was $150 per share. The firm's total market value was unchanged by the split. What was the price of t
Scott Equipment Organization is investigating various combinations of short and long-term debt in financing assets. Assume the organization has decided to employ $30 million in current assets and $3
Calculate expected return and alpha for each stock. Identify and justify which stock would be more appropriate for an investor who wants to
You have been approved for a $70,000 loan toward the purchase of a new home at 10% interest. The mortgage is for 30 years. How much are the approximately annual payments of the loan? Hint: Assume yo
What is meant by the term "self-supporting growth rate? How is this rate related to the AFN equation, and how can that equation be used to calculate the self-supporting growth rate?
Determine the most adequate mixture of debt and equity to be maintained. Obtain a short-term loan to purchase materials. Identify two capital investment projects. Determine the cost of each source of
Pearson Brothers recently reported an EBITDA 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%. What was its charge for depr
Walton Industries, Inc. (WII), has 10,000 shares of common stock outstanding, and the current price of the stock is $100 per share. The firm does not have any debt.
Winston Washer's stock price is $75 dollars per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt, and $6 billio
The copy service Quick Quality in Quantity (Q3) has a payout ratio of 80% and an expected return of 10% on new investments, and is expected to pay a dividend next year of $2.00.
You are given the following forecasted information for the year 2014: sales = $300,000,000, operating profitability (OP) = 6%, capital requirements (CR) = 43%, growth (g) = 5%, and the weighted aver
Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 20 percent. Compute earnings per share for the year 2000.
Because the weighted average cost of capital is always a correct measure of a required return, why do firms not create securities to finance each project and offer them in the capital market in orde
Consider some bonds with one annual coupon payment of 7.25%. The bonds have a par value of $1,000, a current price of $1,125, and they will mature in 13 years. What is the yield to maturity on these
Based on what you know about these types of risk, why will private insurers typically refuse to insure speculative risks? How does the law of large numbers affect speculative and pure risks? Discuss