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Richmond clinic has obtained the following estimates for its cost of debt and equity at various capital structure-What is the firm's optimal capital structure?
Increased sales from Auburn University Finance faculty looking for a working copier are expected to be $20,000 per year with operating costs (excluding depreciation) of $5,000 per year. Calculate th
Given the many issues that a firm needs to address while planning for a merger, which ones would be of primary importance in determining the cost of capital? Why?
Discuss four different methods of valuation, with a focus on their advantages and limitations. Do firms use a single method or do they use multiple methods to arrive at a fair valuation?
The net working capital will be recovered when the project ends. The required return is 15 percent. What is the project's equivalent annual cost, or EAC?
The company reported cost of goods sold in the amount of $343,000, and credit sales were $566,000.What is the company's average balance in accounts payable and accounts receivable?
Describe the free rider problem in the market for corporate control. What assumptions are critical in arriving at the conclusion that takeovers cannot succeed?
Describe the problems arising when managers and shareholders have different time horizons in their investment in the firm. Give the formulas for the manager's project valuation, and the valuation to
What is the appropriate expression for the value of the levered firm? What is the appropriate expression f
Investors are willing to pay $940 for the bond. Flotation costs will be 14 percent of market value. The company is in a 22 percent tax bracket. What will be the firm's after-tax cost of debt on the
How would you determine the intrinsic value of a target company? How would you utilize this information in the M&A process?
Calculate the current price of the stock. Do not use a financial calculator or an online calculator. You must show your work.
What prices for the bond at these new yields would be predicted by the duration rule and the duration-with-convexity rule? What is the percent error for each rule? What do you conclude about the acc
Calculate the expected return of each stock. What is the sign of correlation between the expected return and market capitalization of the stocks?
Explain why judging the efficiency of any financial decision requires the existence of a goal.
Write the ROE, the number of shares outstanding, the dividends per share, and the net income. Compute the sustainable growth rate (g = b * ROE), where b equals the plowback ratio.
ABC company invests $2,000 in an 8-year zero-coupon bond and $4,000 in a 10-year zero-coupon bond. What is the duration of the portfolio?
Write a 2 to 3 pages paper answering the following questions: Do you think we will see a dramatic drop in the use of paper currency in favor of electronic money in the next five years? Yes or no. Ar
What are two advantages and two disadvantages of joint ventures? How do joint ventures and strategic alliances differ from mergers and acquisitions?
What are some of the efficiencies to be gained by the linkage of the assets of natural gas companies, such as pipelines and electric utilities? What are some of the segments of the natural gas indus
Boles buys from its suppliers on terms of 3/10, net 90, and it currently pays on Day 10 and takes discounts, but it could forgo discounts, pay on Day 90, and get the needed $500,000 in the form of c
Calculate the value of a European call option on the index with an exercise price of $50 by using one-period binomial model. Suppose that the market price of the call option considered in question a
A newly issued bond has a maturity of 2 years and pays semiannual coupons at annual rate of 7%. The par value of the bond is $1,000 and it sells at par. What are the convexity and the duration of th
What is operating leverage? How, if at all, is it similar to financial leverage? If a firm has high operating leverage, would you expect it to have high or low financial leverage? Explain your reaso
An investment project has annual cash inflows of $3,200, $4,100, $5,300, and $4,500, and a discount rate of 14 percent. What is the discounted payback period for these cash flows if the initial cost i