Requirement A and B Capital Structure Value Weights Cost of Capital Income Tax After- tax Cost of Capital Weighted Average Cost of Capital Bank loan 7,500,000 17.26% 6.00% 40% 3.60% 0.62% Mortgage bond 5,000,000 11.50% 9.00% 40% 5.40% 0.62% Common stock 30,960,000 71.24% 17.01% 17.01% 12.12% Total 43,460,000
Please see the attached file for details. Payback and Discounted Payback A. A company is determining whether or not to invest in a project of limited duration. The cash flows that correspond to the project are as follows: Annual Cash Flows Year 1 $400,000 Year 2 $400,000 Year 3 $400,000 Year 4 $400,000
The riskiness of an investment project is defined as the variability of its cash flows. While evaluating the level of risk, the Chief Financial Officer (CFO) of an organization should assume that the present value of cash is greater than the company's future value. The level of risk is directly proportional to possible profitab
Http://studentoffortune.com/question/909/Pro-Forma-Income-Statment-with-AFN/980-Rondo%20Case%20information.pdf A. Prepare a valuation of Rondo's securities using the methods demonstrated. You should value the existing mortgage bond, the required rate of returns on equity securities using the CAPM model and the theoretical com
Accounting Multiple Choice: reporting losses, Emu Meat Packing Corp., Pecan Company, Venus Corporation and more...
Can you help me get started on this assignment? ================= 1. Romulan Corporation incurred the following losses: ■ Loss of $100,000 was incurred in the abandonment of equipment. ■ Accounts receivable of $30,000 were written off as uncollectible. ■ Several factories were shut down during a strike at a cos
2. Ameritech Corporation paid dividends per share of $3.56 in 1992, and dividends are expected to grow 5.5% a year forever. The stock has a beta of 0.90, and the Treasury bond rate is 6.25%. (Risk premium is 5.5%) a. What is the value per share, using the Gordon growth model? b. The stock
Please see the attachment. Suppose your firm receives a $5 million order on the last day of the year. You fill the order with $2million worth of inventory. Customer picks up entire order the same day and pays $1million upfront in cash; you also issue a bill for the customer to pay the remaining balance of $4million within 30 da
(1) What role does a finance department play in valuing business opportunities (both internal such as projects and external such as acquisitions)? (2) How might a division manager form a good working relationship with and utilize the talents of the CFO, treasurer and controller for this assignment to include in-text citations an
Research an equation/formula that you use, rely on, or hear about in your everyday world (i.e., weather forecast, stock market predictions)...
Research an equation/formula that you use, rely on, or hear about in your everyday world (i.e., weather forecast, stock market predictions). Describe common uses of the formula or equation that you are exposed to. Are these always right? Why or why not?
1) You expect your newly born child to attend college in 18 years. You have $12,000 to set aside for that purpose. You also expect that the total cost of college education to be $100,000 by that time. Calculate the interest rate at which you have to invest today to achieve your goal. SHOW CALCULATIONS AND WHAT NUMBERS GO IN
The pricing objective of maximizing profits: 1 has not been affected by other, more socially focused concerns. 2 is to be implemented under any and all circumstances. 3 has not always been considered the underlying objective of any pricing policy. 4 must be considered when determining the price
Your company will generate $65,000 in cash flow each year for the next 10 years from a new information database. The computer system needed to set up the database costs $307,000. (Round your answer to 2 decimal places. Omit the "$" sign in your response.) 1) If you can borrow the money to buy the computer system at 8.25 perce
PREFERRED STOCK VALUATION Fee Founders has perpetual preferred stock outstanding that sells for $60 a share and pays a dividend of $5 at the end of each year. What is the required rate of return? PREFERRED STOCK VALUATION Ezzell Corporation issued perpetual preferred stock with a 10% annual dividend. The stock currently y
Problem #1 TCM Petroleum is an integrated oil company headquartered in Fort Worth, Texas. The following are the information on its income statements for 2007 and 2008 (all dollar figures are in millions): 2007 Sales: $12,200.00, cost of goods sold: 72% of sales, depreciation: $850.00, additional CAPEX: $900.00, addition
1) A firm offers terms of 2/15, net 48. What effective annual interest rate does the firm earn when a customer does not take the discount? 2) What is the Current Price and Yield to Maturity of a 8% semi-annual coupon bond if it has a current yield of 9.3% and matures in 10 years? 3) Use the following list of accounts and
What are three key inputs to the valuation model? How would you determine the valuation of an asset? How would the intrinsic value differ from the market value? Explain your answer.
Please help answer the following problems. A. Find the present values of the following cash flow streams at 8% compounded annually. 0 1 2 3 4 5 ------------------------------------------------ Stream A $0 $100 $400 $400 $400 $300 Stream B $0 $300 $400 $400
NOTE: Please follow the instructions; I must use the specific instructions that I attached as well as "current market data." MS Word document has actual assignment. MS PowerPoint has specific instructions: note the updated figure I placed on slide #1 for 10 year treasury is current (9 sep 09) PDF has IBM's stock data you are
Revenue Recognition for Brooke Bennett Marina for slip rental for boats. Prepare journal entries for revenue.
1. Brooke Bennett Marina has 300 available slips that rent for $900 per season. Payments must be made in full at the start of the boating season, April 1, 2008. Slips for the next season may be reserved if paid for by December 31, 2008. Under a new policy, if payment is made by December 31, 2008, a 5% discount is allowed. The bo
Provide a buy or sell recommendation and an estimated price target. Should include the following 5 sections: 1) Background of the company with a life cycle analysis 2) Analysis of Return on Equity 3) The company's future growth rate of earnings 4) Analysis of its required rate of return using the CAPM 5) Intrinsic v
There is a 2 year swap contract (fix to float) signed on the swap rate of 5%; Interest will be exchanged every half year. Now suppose the swap contract start from now on and the current zero rates are in the table below. Calculate how much the swap value right now for the fixed payment side. Maturity(Yrs) Zero Rate(Continuo
1. Compute the expected return and volatility of return for a portfolio that has a portfolio share of 0.9 in the S&P 500 and 0.1 in an emerging market index. The S&P 500 has a volatility of return of 15 percent and an expected return of 12 percent. The emerging market has a return volatility of 30 percent and an expected return
At the end of 2005, Uma Corporation was considering undertaking a major long-term project in an effort to remain competitive in its industry. The production and sales departments determined the potential annual cash flow savings that could accrue to he firm if it acts soon. Specifically, they estimate that a mixed stream of fu
1. Michaely Inc. is an all-equity firm with 200,000 shares outstanding. It has $2,000,000 of EBIT, which is expected to remain constant in the future. The company pays out all of its earnings, so earnings per share (EPS) equal dividends per shares (DPS). Its tax rate is 40%. The company is considering issuing $5,000,000 o
1.________ is hired by a firm to find prospective buyers for its new stock or bond issue. 1. An investment banker 2. A securities analyst 3. A trust officer 4. A commercial loan officer 2. The ________ is utilized to value preferred stock. 1. variable growth model 2. Gordon model 3. constant growth model 4. zero
Answer true or false to each question with one or two sentences of explanation for each. 1. The greater the uncertainty of the future, the greater the need for alternative scenarios in projecting future cash flows. 2. The reliability of continuing value estimates is greater than of explicit forecast estimates. 3. Compet
Please answer questions #2 through #7 and 11-12 at the end of the case. Please use the attached excel spreadsheet to support the analysis. Please show all of your supporting works in excel.
1.Consider the following returns and yields: U.S. T-bill = 8%, 5-year U.S. T-note = 7%, IBM common stock = 15%, IBM AAA Corporate Bond = 12% and 10-year U.S. T-bond = 6%. Based on this information, the shape of the yield curve is 1. normal. 2. downward sloping. 3. upward sloping. 4. flat. 2.If a bond pays
2. Government economists have forecasted one-year T-bill rates for the following five years, as follows: Year 1-year rate (%) 1 4.25 2 5.15 3 5.50 4 6.25 5 7.10 You have a liquidity premium of 0.25% for the next two years and 0.50% thereafter. Would you be willing to purchase a four year T-bond at a 5.75% inter