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Compute the ROA and the RAROC. What are the advantages/disadvantages of each methodology
What alternatives are available to the decedent's estate after her death to maximize the federal estate tax exclusion amount?
We can use the perpetual-growth model to calculate stock price. 50 08 . 12 . 2 0 = - = - = g rDIV P Suppose that Charles River Mining announces that it will switch to a 100 percent payout policy, is
Trivoli Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $97.00; but flotation costs will be 5% of the market price, so the net price w
Ballack's Co.'s common stock currently sells for$46.75 per share. The growth rate is a constant 12 percent, and thecompany has an expected dividend yield of 5 percent.
Metroplex Corporation will pay a $3.04 per share dividend next year. The company pledges to increase its dividend by 3.8 percent per year indefinitely. If you require an 11 percent return on your in
The company estimates that 64,000 direct labor hours will be worked and 80,000 machine hours will be incurred during the year. If overhead is applied on the basis of direct labor hours, what will be t
In the previous problem (3- Balance Sheets for Mergers), suppose the fair market value of James's fixed assets is $12,000 versus the $7,100 book value shown. Jurion pays $17,000 for James and raises
Bill Dukes has $100,000 invested in a 2-stock portfolio. $35,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta?
The current return required by stockholders, rS, is 12 percent. The company has a target capital structure of 40 percent debt and 60 percent equity. The tax rate is 40%. What weighted average cost o
Assume that the U.S. inflation rate becomes high relative to Canadian inflation. Other things being equal how should this affect the (a) U.S. demand for Canadian dollars (b) supply of Canadian dolla
What is a risk management plan? What is one component of such a plan? How does the component relate to the plan's effectiveness?
What is risk tolerance? How would you compare and contrast risk seeking versus avoidance? How would you measure risk tolerance
What reduction of check collection time is necessary to be better or no worse off for having addopted system? How would olution be affected if it could invest the freed up balances at an expected rate
A 9 percent coupon bond issued by the State of Pennsylvania sells for $1,000 and thus provides a 9 percent yield to maturity. What yield on a Synthetic Chemical Company bond would cause the two bond
The owner of a closely-held business dies in year 2006. The value of his estate is $4,000,000. Assuming administration expenses total 5% of the value of the gross estate, under what circumstance ca
Your car dealer is willing to lease you a new car for $329 a month for 72 months. Payments are due on the first day of each month starting with the day you sign the lease contract. If your cost of m
Fixed costs were $1,550,000. What is the average cost? If the company is considering a one-time order for an extra 5,000 pairs, what is the minimum acceptable total revenue from the order? Explain?
Black and White has a cost of equity of 11 percent and a pre-tax cost of debt of 8.5 percent. The firm's target weighted average cost of capital is 9 percent and its tax rate is 35 percent. What is
Distinguish between operating leases and financial leases. Would you be more likely to find an operating lease employed for a fleet of trucks or for a manufacturing plan? Explain.
You also know that the total return on the stock is evenly divided between a capital gains yield and a dividends yield. If its the company's policy to always maintain a constant growth rate in its
Under normal conditions (73% probability), Financing Plan A will produce $23,000 higher return than Plan B. Under tight money conditions (27% probability), Plan A will produce $33,000 less than Plan
Jon fulkerson has also received a credit application from Seether, LLC, a private company. An abbreviated portion of the financial information provided by the company is shown below:
The company had no amortization charges, it had outstanding $6,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was the firm's net income a
Which of the following is not an advantage of the corporate form of business organization?