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    EBIT independent of financial leverage

    Why is EBIT generally considered to be independent of financial leverage? Why might EBIT actually be influenced by financial leverage at high debt levels?

    Finance: Which is true about a bond?

    Which of the following statements is true? a. A bond that has a rating of AA is considered to be a junk bond. b. A bond will sell at a premium if the prevailing required rate of return is less than the bond's coupon rate. c. A zero coupon is a bond that is secured by a lien on real property. d. The legal document that desc

    Senbet Ventures - Sales Volume

    Senbet Ventures is considering starting a new company to produce stereos. The sales price would be set at 1.5 times the variable cost per unit; the VC/unit is estimated to be $2.50; and fixed costs are estimated at $120,000. What sales volume would be required in order to break even, i.e., to have an EBIT of zero for the stereo

    Marginal Cost of Capital for a 40% Tax Bracket

    The XYZ Company is planning a $50 million expansion. The expansion is to be financed by selling $20 million in new debt and $30 million in new common stock. The before-tax required rate of return on debt is 9%, and the required rate of return on equity is 14%. If the company is in the 40% tax bracket, what is the marginal cost o

    Short-term Performance Forecast and Employee Stock Options

    2. What is the benefit of a short-term performance forecast? How might a manager combine the benefits of both short-term and long-term performance forecasts to develop a more accurate value forecast? 6. Identify the strengths and weaknesses of the Enterprise DCF, Economic Profit, and Multiples approaches to estimating conti

    Competitive Stock Market Results

    How does a competitive stock market accomplish the result that Adam Smith described? Should the stock market be regulated? How and why?

    Stock Valuation of the Mill Due Corporation

    A15. (Stock valuation) Let's say the Mill Due Corporation is expected to pay a dividend of $5.00 per year on its common stock forever into the future. It has no growth prospects whatsoever. If the required return on Mill Due's common stock is 14%, what is a share worth?

    This company pays a perpetual annual dividend of 2.5% of its par value.

    1) This company pays a perpetual annual dividend of 2.5% of its par value. Par value is $100 per share. If investors require rate of return on this stock is 15%, what is the value of per share? 2) your company is considering an investment in a project which would require an initial outlay of $300,000 and produce expected

    Interest

    What is the present value of the following cash flows at an interest rate of 10% per year? a) $100 recieved five years from now. b) $100 received 60 years from now. c) $100 received each year beginning one year from now and ending 10 years from now. d) $100 received each year from 10 years beginning now. e) $100 each year

    Payments

    Real estate, Inc., has purchased a building for $1 million. the economic life of the building is 30 years and it will be fully depreciated over the 30 years using the straight-line depreciation method. the discount rate is 14% and the coporate tax rate is 35%. assume there is no inflation. what is the minimum lease payment the c

    Wells Inc. Project Payback

    Wells Inc. is considering a project that has the following cash flow data. What is the project's payback? Year: 0 1 2 3 Cash flow -$1000 $500 $500 $500

    Calculating Return on stock

    Suppose that you buy a stock for $48 by paying $25 and borrowing the remaining $23 from a brokerage firm at 8% annualized interest. The stock pays an annual dividend of $0.80 per share, and after one year, you are able to sell it for $65. Calculate your return on the stock. Then, calculate the return on the stock if you had use

    Credit and depreciation

    1)Nick has a revolving department store credit card account with an annual percentage rate of 15%. Last month's balance on the account was 423.78. During the current month, he made purchases totaling 123.42 and made a payment of 100. The store uses the unpaid balance method. According to this information, what must be the amou

    After ten years, which job pays the higher salary?

    You are offered two jobs. One initially pays $100,000 annually, and your salary will grow annually at 11.5%. The other pays $97,000 annually but your salary will grow at 12%. After ten years, which job pays the higher salary?

    Compute DOL, DFL, and DCL

    A firm has 40,000,000 in revenues, 12,500,000 in fixed costs, 10,250,000 in variable costs and interest of 2,000,000. Compute DOL, DFL, and DCL.

    Using the Sharpe and Treynor Indexes

    Assume the following information over a five-year period: ? average risk-free rate =6% ? average return for Crane stock =11% ? average return for Load stock = 14% ? standard deviation of Crane stock return =2% ? standard deviation of Load stock returns = 4% ? Beta of Crane stock = 0.8 ? Beta of Load stock = 1.1 Can yo

    Interest Expenses

    200,000 in assets to get into operation with only 2 financing alternatives 1. (all equity-all common stock) 2.50% equity and 50percent debt. You will put the entire 200,000 needed to purchase the assets if 50 percent debt financing is used you will contribute only 100,000 of your own funds and the remaining 100,000 will be obtai

    What is the current price of Klein's common stock?

    The last dividend paid by Klein Company was $1.00. Klein's growth rate is expected to be a constant 4%. Klein's required rate of return on equity is 12%. What is the current price of Klein's common stock?

    Single-Stock and 100-Stock Portfolio Example Problem

    Your eccentric uncle died and left you $100,000. However, the will stipulated that the entire amount must be invested in common stocks. Specifically, $50,000 must be invested in a single stock (a one-stock portfolio) and the other $50,000 must be invested in a 100-stock portfolio. You are very risk averse, so you want to mini

    What are the different categories of ratios

    What are the different categories of ratios? Which category of ratios is of the most importance to a bondholder? Why? Which category of ratios is of the most important to a stockholder? Why? In your personal investments, which ratio is the most important to you? Why?

    Importance of Liquidity Ratios

    What are liquidity ratios? Why are they important? How might you use liquidity ratios when making your personal investment decisions? Please properly cite your references. Thanks.

    Global Risk Management

    I have to answer the questions below in 250 words. I have been reading the chapter and don't fully understand these questions: How could a country risk assessment be used to adjust a project's required rate of return? How could such an assess­ment be used instead to adjust a project's estimated cash flows?