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What is the degree of financial leverage for each plan at $7,000,000 of EBIT? What is the financial breakeven point for each plan?
Assume you purchased a corporate bond at its current market price of $850 on January 2, 2002. It pays 9 percent interest and it will mature on December 31, 2011, at which time the corporation will p
The company will increase its dividend by 12 percent next year and will then reduce its dividend growth rate by 3 percentage points per year until it reaches the industry average of 3 percent divide
The Morrissey Company's bonds mature in seven years, have a par value of $1,000, and make an annual coupon payment of $70. The market interest rate for the bonds is 8.5%. What is the bond's price?
What is the pretax cost of debt? What is the aftertax cost of debt? Which is more relevant, the pretax or the aftertax cost of debt? why?
The Up and Coming Corporation's common stock has a beta of 1.05. If the risk-free rate is 5.3% and the expected return on the stock market is 12%, what is the company's cost of equity capital?
The city has an assessed valuation of $280,000,000 collects 96% of its property tax annualyy, and is budgeting #4,000,000 in nonporperty tax revenues and $6,500,000 in expenditures. What will its pr
What is the payback period for the project? If Peach Paving, Inc.'s cutoff is 10-years, should the project be accepted? What is the NPV of the project?
You can purchase a service contract for all of your major appliances for $180 a year. If the appliances are expected to last for 10 years, and you earn 5 percent on your savings, what would be the f
AirJet Best Parts, Inc. has decided to take a $6,950,000 loan being offered by Regions Best at 8.6% APR for 5 years. What is the monthly payment amount on this loan? Do you agree with this decision?
To raise capital, corporate officers have two basic sources of funding from which to choose: (1) debt (i.e., issue bonds/take out a loan) or (2) equity (i.e., issue more stock). What are the trade-o
Find an article that discusses the regulatory climate in which financial institutions operate. In one paragraph, summarize the article, in the second paragraph, explain how it relates or applies to
Explain the pros and cons of the mutual form of ownership of financial institutions over the stock form of ownership. If you were establishing a brand-new savings bank, which form of ownership would
An importer in the United States is due to take delivery of clothing from Mexico in six months. The price is fixed in Mexican pesos. Which of the following transactions could eliminate the importer'
What best explains why market price are useful to a financial manager when preforming a cost benefit analysis?
The company currently has some unused equipment that it currently owns valued at $38,000. This equipment could be used for producing awnings if $12,000 is spent for equipment modifications. Other eq
Based on these ratios, explain which firm should have the highest growth rate of earnings. The analysis must include a DuPont analysis for each company and an examination of the sustainable rate of
Compute the current earnings multiplier (P/E ratio). You expect the payout ratio to decline to 45.0 percent, but you assume there will be no other changes. What will be the P/E?
Next year, you expect BBC to earn $10.75 and continue its payout ratio. Assume that you expect to sell the stock for $134.50 a year from now. If you require 12.25 percent on this stock (required ret
Compute the present value of tax shields generated by these three debt issues. Consider corporate taxes only. The marginal tax rate is Tc = .35. a. A $1000 one-year loan at 8%.
Kurt owns a convertible bond that matures in three years. The bond has an 8 percent coupon and pays interest annually. The face value of the bond is $1,000 and the conversion price is $16.67. Simila
What will be the value of your portfolio in January (net of the proceeds from the options) if the stock price ends up at $40? (Omit the "tiny_mce_markerquot; sign in your response.)
What is the probability distribution of the value of the combined firm after the merger? What is the probability distribution of the end of period debt values and stock values after the merger? Show t
Determine the annual lease payment if the resale value of the asset is $400,000 after 4 years. Assume asset pool is open. Determine the lease payment if the depreciation is straight line and the resa
What is the dividend received deduction and what impact does it have on the double taxation of dividends?