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Assume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $0.67; P0 = $27.50; and g = 8.00% (constant). What is the cost of common from retained earni
You sold ten put option contracts on PLT stock with an exercise price of $32.50 and an option price of $1.10. Today, the option expires and the underlying stock is selling for $34.30 a share. Ignori
What is the project's payback period (to the closest year)? What is the project's discounted payback period? What are the project's NVP? What is the project's IRR? What is the project's MIRR?
Pearson brothers recently reported an EBITDA of $9.0 million and net income of $2.25 million. It had $2.43 million of interest expense, and its corporate tax rate was 40%. What was its charge for de
You observe the following series of returns between companies 'X' and "Y'. If the standard deviation of returns is 8.50 for X and 3.41 for Y, calculate the covariance and correlation.
Working capital is expected to increase by $3,000 at the inception of the project, but this amount will be recaptured at the end of year five. What is the tax effect of selling the old machine?
The subsidiary has issued 15 pr cent preference shares of the face value of Rs.100, to be redeemed at year-end 9. Flotation costs are expected to be 5 per cent; these costs can be amortized for tax
The common stock of Abbott International has a required return of 15.6 percent. The return on the market is 12.7 percent and the risk-free rate of return is 3.9 percent. What is the beta of this sto
Each investment is expected to generate a permanent 20% return. However, the source will be fully developed by the fifth year. (a) What will be the stock price and price-earnings ratio assuming that
Explain why the central bank's intervention caused such panic for currency futures traders with buy positions. Explain why the floor broker's willingness to sell 300 pound futures contracts at the go
Keenan Industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can b
How might the relatively high levels of inflation and interest rates in Thailand affect the baht's value?
Instead, it can wait to see what the outlook is. However, the company cannot pursue the future opportunity unless it makes the $3 million investment today. What is the estimated net present value of
Juno, Inc. Has a profit of 4.8 percent and a capital intensity ratios of .86. The net profit is $420 and the tax rate is 35 percent. What are the total sales for the period?
The Menendez Corporation expects to have sales of $12 million in 2006. Costs other than depreciation and amortization are expected to be 75 percent of sales
The project is estimated to generate $2,640,000 in annual sales, with costs of $1,056,000. The tax rate is 31 percent and the required return for the project is 15 percent. What is the net present v
What is the net cost of the spectrometer? (That is, what is the Year-0 net cash flow?) What are the net operating cash flows in Years 1, 2, and 3? What is the additional (nonoperating) cash flow in Ye
Discuss the arguments in support and against profit maximization and wealth maximization in light of corporate finance?
Last year, Lexington Homes issued $1 million in unsecured, non-callable debt. This debt pays an annual interest payment of $55 and matures 6 years from now. The face value is $1,000 and the market p
Upstate Water Company just sold a bond with 50 warrants attached. The bonds have a 20-year maturity and an annual coupon of 12%, and they were issued at their $1,000 par value. The current yield on
What is the level of income in the country of Examland? Explain how you obtain your answer. Autonomous net exports increase by $2,000. What will happen to income? Explain why.
Candy Company had sales of $230,000 and cost of goods sold of $124,200. What is the gross profit margin (ratio of gross profit to sales)?
Auto Parts sells 1,200 electric parts per week and then reorders another 1,200 parts. If the relevant carrying cost per electric part is $4 and the fixed order cost is $750, what is the total carryi
What happens when you increase the expected rate of return? How do taxes impact your accumulation? Why are marginal tax rates important instead of average?
Calculate the conversion factor for a bond maturing on January I, 2023, paying coupon of 10%. Calculate the conversion factor for a bond maturing on October 1, 2028, paying a coupon of 7°/1.