• Q : Determining the times-interest-earned ratio....
    Finance Basics :

    AEI Incorporated has $6 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 8%, and its return on assets (ROA) is 5%. What is AEI's times-interest-earned (TIE) ratio?

  • Q : Combination of long-term debt and common equity....
    Finance Basics :

    Vigo Vacations has an equity multiplier of 2.5. The company's assets are financed with some combination of long-term debt and common equity. What is the company's debt ratio?

  • Q : Practical applications for managers....
    Finance Basics :

    What are some of the differences between the theoretical M&M propositions and the practical applications for managers? Where do managers say value is created?

  • Q : Accounting and cash flows....
    Finance Basics :

    Why might the revenue and cost figures shown on a standard income statement not represent the actual cash inflows and outflows that occured during a period?

  • Q : Determining the amount spend on acquisition....
    Finance Basics :

    The expected after-tax earnings from Kitchener will be $3.5 million for the first year, but this figure is expected to increase by 3% per year in future. The expected return on the market is 10%, an

  • Q : Maximum line length for probability....
    Finance Basics :

    What is the probability that both inspectors would be busy at the same time? D. How many minutes, on average, would a truck that is not immediately inspected have to wait? E. What condition would ex

  • Q : Discuss the variables for bond valuation....
    Finance Basics :

    Discuss the variables for bond valuation. Which are fixed by contract and which vary by market fundamentals? What circumstances lead to a bond trading at a discount or premium?

  • Q : Estimate company return on equity....
    Finance Basics :

    Management projects an EBIT of $468,000 on sales of $4,000,000, and it expects to have a total assets turnover ratio of 3.1. Under these conditions, the tax rate will be 30%. If the changes are made

  • Q : Negative cash conversion cycle....
    Finance Basics :

    The owner of a hot dog cart purchases inventory with credit every morning and sells all of the inventory by 2 o'clock in the afternoon. The hot dogs an drinks are sold only for cash. Will the owner

  • Q : Board outlining business issues regarding global market....
    Finance Basics :

    You need your Board of Directors to understand the implications of the interest rates on your overseas business. Develop a memo for the Board outlining the business issues regarding the global marke

  • Q : Employee stock option into company valuation....
    Finance Basics :

    For the company you researched in the first two Units, incorporate the effect of the employee stock option (ESO) plan into the common equity valuation.

  • Q : Determining the project annual project free cash flow....
    Finance Basics :

    Jemison's CFO estimates that the distribution center will need additional net working capital equal to 20% of new EBIT ( i. e., the change in EBIT from year to year). Assuming the firm faces a 30% t

  • Q : Dividend per share paid on the stock....
    Finance Basics :

    Using the rate of return above, what should be the current share price of AirJet Best Parts, Inc. if the company maintains a constant 1% growth rate in dividends and the most recent dividend per sha

  • Q : Estimate of the stock post-split price....
    Finance Basics :

    Toombs Media Corporation 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

  • Q : What are the project cash flows....
    Finance Basics :

    What are the project cash flows? You can assume that the recycled PCs cost CT nothing.

  • Q : Estimating present value of windfall....
    Finance Basics :

    You have just received notification that you have won the $1.2 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you're around to col

  • Q : Net present value-wacc-intenal rate of return....
    Finance Basics :

    Calculate Net Present Value (NPV). Calculate Weighted Average Cost of Capital (WACC). What competitive advantages flow from a low WACC. Calculate Intenal Rate of Return (IRR). Calculate the IRR for th

  • Q : Determining the financial ratio analysis....
    Finance Basics :

    A financial ratio by itself tells us little about a company because financial ratios vary a great deal across industries. There are two basic methods for analyzing financial ratios for a company:

  • Q : Anton return on equity....
    Finance Basics :

    Anton's Coffee Shop has a return on assets of 12%. Anton's assets = $100 while Anton's owner's equity = $40 and its debt equals $60. What is Anton's return on equity?

  • Q : Nominal versus real returns....
    Finance Basics :

    Say you own an asset that had a total return last year of 14.1%. If the inflation rate last year was 6.8%, what was your real return?

  • Q : What is the expected value of returns....
    Finance Basics :

    Under normal conditions (70% probability), Financing Plan A will produce $24,000 higher return than Plan B. Under tight money conditions (30% probability), Plan A will produce $40,000 less than Plan

  • Q : What is meant by buying bonds indirectly....
    Finance Basics :

    What factors determine a bond's market price? What role do transaction costs play in bond transactions? What is meant by buying bonds indirectly?

  • Q : How are treasury bonds bought....
    Finance Basics :

    How are Treasury bonds bought? What determines the price you will actually pay for a bond and what intermediaries are involved?

  • Q : Evaluate capital budgeting projects....
    Finance Basics :

    The current stock price is $8.25 per share; stockholders' required return, rs, is 10.00%; and the firm's tax rate is 40%. Based on market value weights, and assuming the firm is currently at its tar

  • Q : Determining firm earnings per share....
    Finance Basics :

    At the end of last year, a firm had 585 million common shares outstanding and $11 billion of balance sheet equity. If the firm's return on equity (ROE) was 11.3-percent last year, what was the firm'

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