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What pattern of return on equity is implied by these assumptions? Is this reasonable?
What non-financial criteria should be used in evaluating proposals in a for-profit technological environment?
The sales price is estimated at $750 per unit, give or take 2 percent. The tax rate is 32 percent. The company is conducting a sensitivity analysis on the sales price using a sales price estimate of
The project's cost and expected annual cash flows will be the same whether the project is delayed or not. The project's WACC is 11.0%. What is the value (in thousands) of the option to delay the pro
The project's cost and expected annual cash flows will be the same whether the project is delayed or not. The project's WACC is 10.0%. What is the value (in thousands) of the project after consideri
The fixed and variable cost estimates are considered accurate within a plus or minus 5 percent range. The depreciation expense is $68,000. The tax rate is 34 percent. The sales price is estimated at
What is the purpose of the "Other Adjustments Account" (OAA) and what types of items increase it or decrease it?
An automobile company, NISSAN, has a temporary cash surplus and lends its funds overnight through a repurchase agreement to a government securities dealer, earning $55,600 in interest income when th
What is the horizon value as of 12/31/2011? What is the value of operations as of 12/31/2010? What is the total value of the company as of 12/31/2010? What is the intrinsic price per share for 12/31/2
You own American depository receipts (ADRs) that represent Genevo stock. Each share that you own represents one share of the stock traded on the Swiss stock exchange. What is the estimated value of
A new issue of 90-day commercial paper is available from a dealer at $97.60 on a $100 basis. What is the bank discount yield to maturity of this note?
Behavioural finance is a relatively new discipline. What is behavioural finance and why should it be considered to be an important element in the financial planning process? no more than 300 words f
The investor would like to refinance at an amount equal to 75% of the property value. He has found out that the property can be refinanced at a 75% loan-to-value ratio over 15 years. What can be sai
Differences in taxable income and pretax accounting income that will not be offset by corresponding differences or "turn around" in future periods are called
The portfolio's beta is 1.25. Now suppose you decided to sell one of your stocks that has a beta of 1.00 and to use the proceeds to buy a replacement stock with a beta of 1.35. What would the portfo
What can be done to manage potential conflicts of interest? Do we just have to live with a lack of objectivity and search out the hidden agendas? Do you think this contributed to the recent massive
What is Dozier's terminal, or horizon, value? (Find the value of all free cash flows beyond Year 3 discounted back to Year 3) What is the current value of operations for Dozier? Suppose Dozier has $10
The staock just paid a dividend of $1.00 a share and the dividend is expected to grow forever at a constant rate of 10% a year. What stock price is expected 1 year from now? What is the required rate
Some people (Myron J. Gordon in particular) argued that a higher debt ratio would lower AT&T's cost of capital and permit it to charge lower rates for telephone service. Gordon thought an optima
The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the difference between these two WACCs?
Toombs Media Corp. recently completed a 3-for-1 stock split. Prior to the split, its stock sold for $150 per share. The firm's total market value was unchanged by the split. Other things held consta
How can a company with a High ROE have a low PE ratio? what type of company have: A high ROE and a low market-to-book ratio? A high ROE and a high market-to-book ratio? A low ROE and a High market-t
Other payments for wages, rent, and taxes are constant at $500 per month. Construct a single month's cash budget with the information given. What is the average cash gain or (loss) during a typical
The tools will be obsolete and worthless after 3 years. The firm has the option to buy these tools. The firm will depreciate the cost of the tools on a straight-line basis over their 3-year life.
Binomial Model - The current price of a stock is $20. In 1 year, the price will be either $26 or $16. The annual risk-free rate is 5%. Find the price of a call option on the stock that has a strike