A major chemical manufacturer has experienced a market re-evaluation lately due to a number of lawsuits. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8 percent (paid semiannually). The par value of each bond is $1,000. The required rate has now risen to 16 percent. What is the current valu
Mr. Arthur recently purchased a block of 100 shares of Bingham Corporation common stock for $6,000. The stock is expected to provide an annual cash flow of dividends of $400 indefinitely. Assuming a discount rate of 8 percent, how does the price Mr. Arthur pay compare to the value of the stock? __________
You have determined the profitability of a planned project by finding the present value of all the cash flow from that project. Which of the following would cause the project to look less appealing, that is, have a lower present value? a. The discount rate decrease. b. The Cash flows are extended over a longer period of t
You must show all your work on this homework to receive credit. Downloadable Financials Data Return to Hoover's Annual Financials Annual Financials Income Statement (All dollar amounts in millions except per share amounts.) Dec 04 Dec 03 Dec 02 Revenue 13,564.70 12,358.60 11,356.60 Costs of Good
Magic City Steel Enterprises has current assets of $160,000, total assets of $200,000, current liabilities of $85,000, and total liabilities of $100,000. The company is trying to negotiate a bank loan of $75,000. The terms of the loan require repayment over two years and state that the debt ratio cannot exceed .60. Calculate the
One task of a financial manager is to do research on the main competition to the firm you work for. Do some research using Yahoo Finance and other search engines on these two competitors, then write a two to three page paper answering the following question: Is your reference company more or less risky to the point of view o
True or False Once opportunity costs are recognized they typically do not result in a direct reduction of cash but must be allocated as a cash outflow.
True of False Other factors held constant, higher CCA rates have the effect of reducing taxes and increasing cash flows.
True or False When the Board of Directors carefully selects and then appoints the management team, this is an example of an indirect agency cost.
Longhorn Corporation's common stock currently trades at $65. It pays an annual dividend which yields 3.23%, and it is expected to grow at a rate of 2% per year for the next four years. The S&P 500 index average return last year was 5.09% Calculate Longhorn's expected stock price at the end of four years.
Here is recent financial data on Pisa Construction, Inc: - Stock price $40 - Market value of firm $400,000 - Number of shares 10,000 - Earnings per share $4. - Book net worth $500,000 - Return on investment 2% quarterly Pisa has not performed spectacularly to date. However, it wishes to issue new shares to obtain $
1. Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given below: Possible Sales Market Reaction in Units Probabilities Low response . . . . . . . . . . . . . 20 .10 Moderate response . . . . . . . . . 40 .30 High respons
List three types of non-financial rewards that would be desired by professional employees." AND GIVE AN EXAMPLE OF EACH NOTE: THIS IS A LEADERSHIP CLASS
Markowitz Efficient Frontier - the graphical depiction of the Markowitz efficient set of portfolios representing the boundary of the set of feasible portfolios that have the maximum return for a given level of risk. Any portfolios above the frontier cannot be achieved. Any below the frontier are dominated by Markowitz efficient
How do you journalize treasury stock transactions?
Sara Lee Corporation earned revenues of $17.7 billion during 20x1 and ended the year with net income of $2.3 billion. During 20x1, Sara Lee collected $18.0 billion from customers and paid cash for all of its expenses plus an additional $0.4 billion on 20x0 expenses left over from the preceding year. Answer these questions abou
Firms with a high degree of operating leverage are: a)easily capable of surviving large changes in sales volume, b)usually trading off lower levels of risk for higher profits, c)significantly affected by changes in interest rates, d)trading off higher fixed costs for lower per-unit variable costs.
A firm has $1,000,000 in its common stock account and $2,500,00 in its paid-in-capital account. The firm issued 100,000 shares of common stock. What was the original issue price if only one stock issue has ever been sold? a)$35 per share, b)$25 per share, c)$10 per share, d) not enough info
The effect of the high rates of increased productivity during the 1990s was to make a)financial forecasting more difficult, b)cost of capital calculations more uncertain, c)capital budgeting decisions less reliable, d)inflation remain relatively low
A weakness of breakeven analysis is that it assumes: a)revenue and costs are a linear function of volume, b)prices and costs increase when the economy is strong and confidence is high, c)cost of goods sold go up as revenue increases, d)there is no weakness.
Question 1 In the scientific method, model parameters are: a. always changing b. constant during the process of solving a specific problem c. defined as decision variables d. found in the model solution process Question 2 The components of break-even analysis are: a
I would just like someone to check this and tell me if I'm on the right track with this or totally off. Thanks! --- BE2-20 Gordon Company issued $1,000,000, 10-year bonds and agreed to make annual sinking fund deposits of $80,000. The deposits are made at the end of each year into an account paying 5% annual interest. What a
Gordon Company issued $1,000,000, 10 year bonds and agreed to make annual sinking fund deposits of $80,000. The deposits are made at the end of each year into an account paying 5% annual interest. What amount will be in the sinking fund at the end of 10 years? How do I set this up to calculate?
Suppose the expected return on the market portfolio is 13.8 percent and the risk-free rate is 6.4 percent. Solomon Inc. stock has a beta of 1.2. Assume the capital-asset-pricing model holds. Return on Stock= Rf+B(Rm-Rf) Rf= risk free rate B=beta Rm= Expected return on market portfolio A. What is the expected retur
Company Z-prime is like Z in all respects save one: Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends. What is Z-prime's stock price? Assume next year's EPS is $15. Necessary Information: Company Z's earnings and dividends per share are expected to grow indefinitel
Using the following financial information, calculate the current ratio and inventory turnover ratio for Wal-Mart and Target. What does it tell you? Discuss. Wal-Mart Balance Sheet Wal-Mart Get Balance Sheet for: View: Annual Data | Quarterly Data All numbers in thousands PERIOD ENDING 31-Jan-05 31-Jan-04 31-J
Discuss the three key financial statements a company uses and what the information on each can tell a potential investor about the company?
2. (Recording the Issuance of Common and Preferred Stock) Kathleen Battle Corporation was organized on January 1, 2003. It is authorized to issue 10,000 shares of 8%, $100 par value preferred stock, and 500,000 shares of no par common stock with a stated value of $1 per share. The following stock transactions were completed duri
Leases R Us, Inc Problem-Calculating Annual Payments. Leases R Us, Inc. (LRU) has been contracted by Robotics of Beverly Hills (RBH) to provide lease financing for a machine that would assist in automating a large part of their current assembly line. Annual lease payments will start at the beginning of each year.
Given the following errors: The bank recorded a deposit of $200 as $2,000.The Company's bookkeeper mistakenly recorded a payment of $250 received from a customer as $25 on the bank deposit slip. The bank caught the error and made the deposit for the correct amount . The bank Statement shows a check written by the Company f