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The Celluloid Collar Corporation has $360,000 in tax loss carryforwards. The Bowstring Shirt Company, a firm in the 30% tax bracket, would be willing to pay (on a nondiscounted basis) the sum of ___
he Evanec Company's next expected dividend, D1, is $3.18; its growth rate is 6% and the stock now sells for $36. New stock can be sold to net the firm $32.40 per share. What is Evanec's cost of reta
Find the interest rate (or rate of return) in each of the following situations. You borrow $85,000 and promise to pay back $201,229 at the end of 10 years. You borrow $9,000 and promise to make paym
The company plans on increasing its dividend by 10 percent, 7 percent, and 5 percent a year for the next 3 years, respectively. After that, the growth rate will be held to 3 percent per year. What
Define the term incremental cash flow. Since the project will be financed in part by debt, should the cash flow statement include interest expenses? Explain.
Calculate the NPV of this investment opportunity if your cost of capital is 8%. Should you make the investment? Calculate the IRR and use it to determine the maximum deviation allowable in the cost
In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to make $1,250 of capital expenditures on new fixed assets and to invest $300 in net op
LL incorporated's currently outstanding 11% coupon bonds have yield to maturity of 8%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax
Calculate the net asset value (NAV) for the fund. Assume that 8,000 shares are outstanding for the fund
Wald Corporation has outstanding bonds with a 6-year maturity, $1,000 par value, and 7% coupon paid semiannually (3.5% each 6 months), and those bonds sells at their par value. Wald has another bond
What should a company do with excess cash it makes from operations? For example a company that specializes in the manufacture of cable used primarily by telephone and cable companies has revenue of
At the beginning of the year, long-term debt of a firm is $290 and total debt is $330. At the end of the year, long-term debt is $240 and total debt is $340. The interest paid is $26. What is the am
Write a paper in no more than 2,100 words that analyzes Guillermo's alternatives and make a recommendation of a financial decision. The paper must also include a justification for your recommendatio
Martell Mining Company's ore reserves are being depleted, so its sales are falling. Also, its pit is getting deeper each year, so its costs are rising. As a result, the company's earnings and divide
What are three primary roles of the U.S. Securities and Exchange Commission (SEC)? How does the Sarbanes-Oxley Act of 2002 augment the SEC's role in managing financial governance? Do you think busin
What is the capital market? How is the primary market different from the secondary market? In your opinion, are these markets efficient? Why?
Express your position as an option on the value of the company. Express the position of the debtholders in terms of options on the value of the company. What can you do to increase the value of your p
The company's stock has a beta equal to 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock's current price?
Discuss the relationship between the price of a bond and interest rates. Why does the price of a bond change over its lifetime? Please offer a quantitative example to demonstrate this relationship.
Calculate the ATR (annual tax rate) of the corporation as a percentage of its economic profit, assuming that the opportunity cost of capital is 8%
Booher Boom Stores has a beta of 0.8. The yield on a 3-month T-bill is 4% and the yield on a 10-year T-bond is 6%. The market risk premium is 5.5%, and the return on an average stock in the market l
A best-selling author decides to cash in on her novel by selling the rights to the book's royalties for the next four years to an investor. Royalty payments arrive once per year, starting one year f
Compute his likely cash balance or deficit for the end of the year. Start with beginning cash and subtract the asset buildup (equal to 50 percent of the sales increase) and add in profit. (Negative
The income statement for the year ended December 31, 2009, the balance sheets for December 31, 2009 and 2008, and the statement of retained earnings for the year ended December 31, 2009, for Technic
Nick's Enchiladas Incorporated has preferred stock outstanding that pays dividend of $5 at the end of the each year. The preferred sells for $59 a share. What is the stock's required rate of return?