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Prepare the entry to record the issuance of the bonds and warrants. Assume the same facts as part (a), except that the warrants had a fair value of $8. Prepare the entry to record the issuance of the
Supplier A offers trade credit terms of 3/20, net 70, while supplier B offers 4/15, net 80. What is the approximate effective cost of missing the cash discounts from each supplier?
Jensen Autos, one of the largest car dealers in Eau Claire, sells about 700 vehicles a year. The cost of placing an order with their supplier is $1,100, and the inventory carrying costs are $120 for
Marigold Corp. wants to borrow money from Howard Bank for a period of five years. The firm's credit standing calls for a premium of 1.5 percent over the prime rate.
Hayley makes annual end of year payments of 6,260.96 on five years loan with an 8% interest rate. what is the original priciple amount was?
Ackerman Co. has 9 percent coupon bonds on the market that have 10yrs left till maturity. The bonds make annual payments. If the YTM on these bonds is 8.75 percent, what is the current bond price?
Discuss the difficulties that having options in a security portfolio create for the measurement of portfolio risk. Suggest how the standard deviation statistic should be modified to account for this
The company has estimated its cost of capital to be 12 percent. Assume that the entire $100,000 is paid at time 0 (the beginning of the project). The marginal tax rate for the firm is 40 percent. Sh
The estimated salvage value at the end of 10 years is $0. The machine is expected to save the company $1,554 per year before taxes and depreciation. The company depreciates its assets on a straight-
What is the present value of $1,100 per year, at a discount rate of 10 percent if the first payment is received 6 years from now and the last payment is received 30 years from now?
An important thing about foreign exchange rate determination is that parity conditions, asset approach, and balance of payments approaches are complementary theories rather than competing theories.
Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels o
Bonds with an A rating are selling for 50 basis points above the 20-year Treasury bond rate. What is the borrowing cost to do this transaction?
Windy Burgers is trying to determine when to harvest a herd of cows that it currently owns. If it harvests the herd in year 1, the NPV of the project would increase over an immediate harvest by 25 p
Cash expenses will be $5 million, and depreciation expenses will be $1 million per year. If the firm takes that project, then it will reduce the cash revenues of an existing project by $2 million. W
The current ratio in the company, for which you are a financial analyst, is 3 to 1. The average for other firms in the industry is 1.6 to 1. Management has asked you to evaluate the company's ratio,
In looking at an analysis of financial statements that you have prepared for your employer, a management team member points out that the gross profit margin rate has declined in each of the past thr
Explain how the Capital Asset Pricing Model (CAPM) works. What are the strengths and weaknesses of the CAPM? Using each of these four stocks Hess Corporation, Conoco Phil, Exxon mobile and Murphy oi
The new clubs will also require increase in new working capital of $1,400,000 that will be returned at the end of the project. The capital rate is 40 percent, and the cost of capital is 10 percent.
Calculate the expected rate of return on investments X and Y using the most recent year's data. Assuming that the two investments are equally risky, which one should Douglas recommend? Why?
Long-term bonds face interest-rate risk; short-term bonds face reinvestment-rate risk. How is the value of a typical corporate bond determined?
Calculate the inventory turnover for each year. Comment on your findings. What would have been the amount of inventories in 2011 if the 2010 turnover ratio had been maintained?
Determine the receivables turnover in each year. Calculate the average collection period for each year. Based on the receivables turnover for 2010, estimate the investment in receivables if net sales
A firm has an ROE of 3%, a debt/equity ratio of .5, a tax rate of 35%, and pays an interest rate of 6% on its debt. What is its operating ROA?
The expected value of Hong Kong dollar is HK$7.8088. What are the expected dollar cash flows of Muchi Muchi's Co.?