P11-6 EBIT sensitivity Stewart Industries sells its finished product for $9 per unit. Its fixed operating costs are $20,000, and the variable operating cost per unit is $5. a. Calculate the firm's earnings before interest and taxes (EBIT) for sales of 10,000 units. b. Calculate the firm's EBIT for sales of 8,000 and 12,000 u
P4-43 Loan amortization schedule Joan Messineo borrowed $15,000 at a 14% annual rate of interest to be repaid over 3 years. The loan is amortized into three equal, annual, end-of-year payments. a. Calculate the annual, end-of-year loan payment. b. Prepare a loan amortization schedule showing the interest and principal break
Value of the vehicle V depreciates T Months later V=10,000(.95)^t [for 0<T<36] How much is the depreciation? (those are less than or equal to signs) I already did the amort. portion. I need help with the depreciation. *The value should be 10,000 not 1000 as indicated in the problem. I have a Finance problem. It is time t
I need to see intermediate steps and formulas. Stock Values The Brennan Co. just paid a dividend of $1.40 per share on its stock. The dividends are expected to grow at a constant rate of 6% per year indefinitely. If investors require a 12% return on the Brennan Co. stock, what is the current price? What will the price be i
If the lag between purchase date and the date at which payment is due is known as the terms lag and the lag between the due date and the date on which the buyer actually pays is termed the due lag, and the lag between the purchase and actual payment dates is the pay lag. Then Pay lag = terms lag + due lag How would you
I need to have the formulas and intermediate steps provided along with the answers. 1. Stock Values The Brennan Co. just paid a dividend of $1.40 per share on its stock. The dividends are expected to grow at a constant rate of 6% per year indefinitely. If investors require a 12% return on the Brennan Co. stock, what is the c
1. Sam's Company expects to pay a dividend of $6 per share at the end of year one, $9 per share at the end of year two, and then be sold for $136 per share at the end of year two. If the required rate on the stock is 20%, what is the current value of the stock? 2. FastGrow is a no growth firm and has 2 million
Stock was issued several years agao and carried a fixed dividend of $6 per share. Over time, the yields have gone from 6 % to 14% (RRR). What was the orginal issue price and what is the current value of this preferred stock?
Sam Jones is a pharmacist earning $90,000 per year and he is deciding whether to purchase a pharmacy and become the owner/manager of a business that generates revenue of $500,000 per year. The pharmacy has expenses of $200,000/yr. for supplies, $75,000/yr. for hired help, $50,000/yr. for rent, and $10,000 for utilities. You m
Andre has asked you to evaluate his business, Andre's Hair Stylling. Andre has five barbers working for him. (Andre is not one of them.) Each barber is paid $9.90 per hour and works a 40-hour week and a 50-week year, regardless of the number of haircuts. Rent and other fixed expenses are $1,750 per month. Hair shampoo used on al
Suppose you hold a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio beta is equal to 1.12. Now, suppose you have decided to sell one of the stocks in your portfolio with a beta equal to 1.0 for $7,500 and to use these proceeds to buy another stock for your portfolio.
The market and Stock J have the following probability distributions: Probability rm rj 0.3 15% 20% 0.4 9 5 0.3 18 12 A. Calculate the expected rates of return for the market and Stock J. B. Calculate the standard deviations for the market and Stock J. C. Calculate the coefficient of variat
A sot's return has the following distribution: Demand for the Probability of this Rate of Return Company's Products Demand Occurring if This Demand Occurs Weak 0.1 (50%) Below average 0.2 (5) Average 0.4 16 Above average 0.2 25 Strong 0.1 60 1.0 Calculate the stock's expected retur
JF Company issued 10,000 shares of $15 par common stock on Feb 1, 2007 for $20 per share. The company bought back 2000 shares when the share price fell to $16 per share on Aug 31, 2007 and then resold 1000 shares when the price rebounded to $22 per share on Dec 15, 2007. JF accounts for its treasury stock transactions using th
Garrett Corp. has been going through a difficult financial period. Over the past three year, its stock price has dropped from $50 to $18 per share. Throughout this downturn, Garrett has managed to pay a $1 dividend each year. Management feels the worst is over but intends to maintain the $1 dividend for three more years, after w
If a stock is incorrectly priced by $0.05 and it costs $0.25 to exploit the opportunity, is the market inefficient?
A corporation issues 2,000 shares of common stock for $ 32,000. The stock has a stated value of $10 per share. The journal entry to record the stock issuance would include a credit to Common Stock for My answer is $32,000 Am I correct? When the market rate of interest was 12%, Newman Corporation issued $1,000,000, 11
Determine the common shares and the long term bond liability of 3M at December 2006.
Assume that Mary Brown Inc. hired you as a consultant to help it estimate the cost of capital. You have been provided with the following data: Do = $1.20 Po = $40.00 and g = 7%(constant) Based on the DCF approach, what is Brown's cost of equity from retained earnings.
Why would a project that reaches the break-even point in terms of net income potentially be bad for shareholders
Discuss margin buying of common stocks. Include in your discussion the advantages and disadvantages, the types of margin requirements, how these requirements are met, and who determines these requirements.
The Connors Company last dividend was $1.00. Its divident growth rate is expected to be constant at 15% for 2 years, after which dividends are expected to grow at a rate of 10% forever. Connors required return(rs) is 12%. What is Connors' current stock price?
Rangoon Corp's sales last year were $400,000 and its year-end total assets were $300,000. The average firm in the industry has a total assets turnover of 2.5. The new CFO belives the firm has excess assets that can be sold so as to bring the TATO down to the industry average without affecting sales. By how much must the asset
Multiple Choice Questions: 1. The interest rate charged by banks with excess reserves at a Federal Reserve Bank to banks needing overnight loans to meet reserve requirements is called the_________. A) prime rate B) discount rate C) federal funds rate D) call money rate E) money market rate 2. You want to purch
I have two problems that I am unable to find a solution. Please see attachments. E10-6 Journalize entries for disposal of plant assets. (SO 6) Presented below are selected transactions at Thomas Company for 2006. Jan. 1 Retired a piece of machinery that was purchased on January 1, 1996. The machine cost $62,000 on tha
I am not sure how to calculate the retained earning increase. Springsteen Music company earned $820 million last year and paid out 20 percent of earnings in dividends. How much did the company's retained earnings increase?
Multiple Choice Questions: 1. Assume that you manage a $10.00 million mutual fund that has a beta of 1.05 and a 12.00% required return. The risk-free rate is 4.75%. You now receive another $10.00 million, which you invest in stocks with an average beta of 0.65. What is the required rate of return on the new $20.00 million por
Multiple Choice Questions: 1. XYZ Inc.'s stock has a 50% chance of producing a 30% return, a 25% chance of producing a 9% return, and a 25% chance of producing a -25% return. What is XYZ's expected return? A. 14.4% B. 15.2% C. 16.0% D. 16.8% E. 17.6% 2. An investor has a 2-stock portfolio with $50,000 invested in S
Grateway Inc. has a weighted average cost of capital of 11.5 percent. Its target capital structure is 55 percent equity and 45 percent debt. The company has sufficient retained earnings to fund the equity portion of its capital budget. The before-tax cost of debt is 9 percent, and the company's tax rate is 30 percent. If the exp
Over the past five years, the Phoenix Fund has averaged a monthly return of .013, while money market instruments have yielded .006. During the same period, the mean return on the market index was .08 with a standard deviation of .25 and beta of 1. While evaluating Phoenix Fund, you computed a standard deviation of returns .36, a