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Subsidiary issues additional stock under different assumptions

Primetime Corporation owns 2/3 (600,000 shares) of the outstanding $1 par common stock of Satellite company on January 1, 2006. In order to raise cash to finance an expansion program, Satellite issues an additional 100,000 shares of its common stock for $5 per share of January 3, 2006. Satellite's stockholder's equity before an

Break Even Analysis for Total Fixed Costs

Total Fixed Cost $600,000 Plant Capacity 70,000 units Desired Profit $150,000 Unit Price $50 Variable Cost $30 Tax Rate 25% With this information, calculate the answers to the following questions: 1) Calculate what the total income the company must get its sales to cover the Total Fixed Cost, Total Variable Cost

Financial Management

Provide computation and formulas on how to calculate the following: 1. Hughes Technology has had net income of $450,000 in the current fiscal year. there are 100,000 shares of common stock outstanding with convertible bonds, which have a total face value of $1.2 million. the $1.2 million is represented by 1,200 different $1,0

Description of constant growth stock

The last dividend paid by xyz company was 1.00. XYZ growth rate is expected to be a constant 5%. XYZ's required rate of return on equity(ks) is 10%. What is the current price of XYZ's Common Stock? XYZ Corp. budgeted mnthly sales are 4500. 40% of it customers pay in the first month and take 1% discount. the remaining 60% pay

Accounting & Finance - 20 Multiple Choice Questions

1. An analysis and aging of accounts receivable of the Lucille Company at December 31, 2007, showed the following: Accounts Receivable $840,000 Allowance for Doubtful Accounts (before adjustment) 36,000 (cr) Accounts estimated to be uncollectible 76,800 Compute the net realizable value of the accounts receivable of Lucill

Cost Accounting

Vid-saver, Inc., has five activity cost pools and two products (a budget tape rewinder and a deluxe tape rewinder). Information is presented below: Activity Cost Cost Estimated Cost Driver by Product Pool Driver Overhead Budget Deluxe Ordering & Receiving Orders $110,000 600

Description of Component Cost of Debt

1. To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 20 years to maturity. This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $875, and has a par value of $1,000. If the firm's tax rate is 40%, what is the component cost of debt for use in

Opportunity costs; sunk costs; externalities

Why is a sunk cost excluded (I think they are sunk because the manager is in the process of sinking the company) while opportunity cost (opportunity for what?) is included? Moreover, why is externality cost (external to my office, my company, or my comprehension) included in financial analyses?

Modigliani and Miller's Proposition 1

If the assets are tangible and the market can supply meaningful valuations then you could say that the value of the firm is the assets-in a perfect world. Another approach is to look at the discounted cash flow that the firm generates. Further, if we look at the value of a firm's stock assuming that the market can fairly value

Equilibrium Expected growth rate

McDonnell Manufacturing is expected to pay a dividend of $1.50 per share at the end of the year (D1 = $1.50). The stock sells for $34.50 per share, and its required rate of return is 11.5%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate?

New stock offering

You work for abc in the finance department and own shares that are selling at $20 per share on the NYSE. There is a new stock offering that is going to be publicly announced. the cost from the offering will be 10% of the new offerning. The new offering will increase the number of outstanding share by 30%. There are currently 2

Client mix decision: Maximize Loren's Monthly Commissions

Client mix decision. a) Based on data given what client mix will maximize Loren's monthly commissions, assuming he works 160 hours per month? b) What other factors should Loren consider as he makes his decisions about his client mix? Customer Group A Average investment in company products per mo. $900 Hrs. devoted per custome

Rates of Return and Equilibrium

The beta coefficient for stock C is bc=0.4 and that for stock D is bd=-.05. (stock D's beta is negative, indicating that its rate of return rises whenever returns on most other stocks fall. There are very few negative beta stocks, although collection agency and gold mining stokcs are sometimes cited as examples)

Maturity Risk Premium

Kelly Inc's 5-year bonds yield 7.50% and 5-year T-bonds yield 5.80%. The real risk-free rate is r* = 2.5%, the default risk premium for Kelly's bonds is DRP = 0.40%, the liquidity premium on Kelly's bonds is LP = 1.3% versus zero on T-bonds, and the inflation premium (IP) is 1.5%. What is the maturity risk premium (MRP) on all 5

Forecasting Risk and Cost-Cutting Proposal

Forecasting Risk - What is forecasting risk? in general, would the degree of forecasting risk be greater for a new product or a cost-cutting proposal? Why? 2. Sensitivity analysis and Scenario analysis- What is the essential difference between sensitivity analysis and scenario analysis? 3.Marginal cash flows - A co-wor

ACCOUNTING PROBLEM (see attachment for word doc)

Part: 1 The Following information was reported by Gap, Inc in its 2006 annual report. 2006 2005 2004 2003 2002 Total assets $8,544 $8,821 $10,048 $10,713 $10,283 (In Millions) Working Capital $2,757 3,297 $ 4,062 $4,156 $2,972 Current ratio 2.2

Fixed cost and Variable cost

1 page Details: Costs can be classified into two categories, fixed and variable costs. These costs behave differently based on the level of sales volumes. Suppose we are running a restaurant and have identified certain costs along with the number of annual units sold of 1000. Item: Raw Materials (cost for hamburge

Estimating given stock's price

Sorenson Corp.'s expected year-end dividend is D1 = $1.50, its required return is rS = 12.00%, its dividend yield is 8.00%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7?

Finance Problems

1. Paying a stock dividend ________ the retained earnings account. 1. 1. increases 2. 2. has no effect on 3. 3. reorganizes 4. 4. decreases 2. Firms are usually prohibited by state law from distributing 1. 1. retained earnings as dividends. 2. 2. dividends in a year the firm has a net loss. 3.

Statement of cash flows

The following account balances relate to the stockholders' equity accounts of Gore Corp. at year-end. 2008 2007 Common stock, 10,500 and 10,000 shares, respectively, for 2008 and 2007 $160,000 $140,000 Preferred stock, 5,000 shares 125,000 125,000 Retained earnings 300,000 260,000 A small

Analyzing Portfolios

I am trying to understand what formula to use. I want to create a portfolio equally risky as the market, and I have $1,000,000 to invest. So Given the info below, I need to fill the table below; Asset Investment Beta Stock A $200,000 .80 Stock B $250,000 1.30 Stock C

Deer Valley Lodge -Responsibility Center & Financial Control

Deer Valley Lodge, a ski resort in the Wasatch Mountains of Utah, has plans to eventually add five new chairlifts. Suppose that one lift costs $2 million, and preparing the slope and installing the lift costs another $1.3 million. The lift will allow 300 additional skiers on the slopes, but there are only 40 days a year when the

DSO

Han Corp's sales last year were $395,000, and its year-end receivables were $52,500. The firm sells on terms that call for customers to pay 30 days after the purchase, but some delay payment beyond Day 30. On average, how many days late do customers pay? Base your answer on this equation: DSO - Allowed credit period = Average da

Portfolio Betas & expected returns

1. You own a stock portfolio invested 25% in stock Q, 20% in stock R, 15% in stock S, and 40% in stock T. The betas for these stocks are .84, 1.17, 1.11, and 1.36 respectively. What is the portfolio beta? 2. (Using CAPM) A stock has a beta of 1.05, the expected return on the market is 11 % and the risk-free rate is 5.2 %.

Consider the Role of the Finance Department

Consider the role of the finance department at On Your Mark. As a division manager, 1. How might the finance department help you to successful complete the duties of your job? 2. What role does a finance department play in valuing business opportunities for future acquisitions? 3. What are the ethical responsibilities of