Problem: Overtime Corporation expects an EBIT of $35,000 every year forever. Overtime Corporation currently has no debt, and its cost of equity is 14 percent. The company can borrow at 8 percent. If the corporate tax rate is 38 percent, what is the value of firm? What will the value be if the company converts to 50 percent debt
The basket of goodies costs $300, and is expected to cost $515 next year. The real rate of interest is 2%. Our company, Basic, Inc. has a bond risk premium of 2.5% and a preferred stock risk premium of 3%. The Market Risk Premium is 4% and Basic has a Beta of 1.25. Basic's target capital structure is 40% debt, 50% common s
A. General Mills, Inc., the large manufacturer of packaged foods, reported the following in its annual report for the year ending May 25, 2008 (in millions): Short-term borrowing $ 442.0 Long-term debt 4,348.7 Stockholders' equity 6,215.8 The short-term borrowing and long-term debt are carried on the balance sheet at app
A patent was acquired by Grotius Corporation on January 1, 2000, at a cost of $72,000. The useful life of the patent was estimated to be 10 years. At the beginning of 2004, Grotius spent $9,000 in successfully prosecuting an attempted infringement of the patent. At the beginning of 2005, Grotius purchased a patent for $25,000 th
"What is economics? What role does economics play in your personal financial decisions and the decisions that your organization makes? What are the resources that are available to you in your efforts to understand current economic conditions?"
I need assistance with the following: The net income of Simon and Hobbs, a department store, decreased sharply during 2000. Carol Simon, owner of the store, anticipates the need for a bank loan in 2001. Late in 2000, Simon instructs the store's accountant to record a $10,000 sale of furniture to the Simon family, even though
1) Stock A has the following probability distribution of expected returns. What is Stock A's expected rate of return and standard deviation? . Probability________Rate of Return 0.1.............................-15% 0.2.................................0 0.4................................5 0.2............................10
Hello, I do not seem to find my notes on the years-of-service method in calculating and my book is not explaining it well enough. Can someone show me how to do this? On January 1, 2003, Sunny Incorporated amended its pension plan which caused an increase of $4,800,000 in its projected benefit obligation. The company has 40
I need assistance on completing this example. (Cash budget) The Sharpe Corporation's projected sales for the first eight months of 2004 are as follows: January $ 90,000 May $300,000 February 120,000 June 270,000 March 135,000 July 225,000 April 240,000 August 150,000 Of Sharpe's sales, 10 percent is for cash, another 60
Describe the benefits and drawbacks of both traditional and Roth IRAs. Which is the better choice IRA for you? Why?
1. The U.S. Treasury issues bills, notes, and bonds. How do these three securities differ? 2. A call provision on a bond allows the issuer to redeem the bond at will. Investors do not like call provisions and so require higher interest on callable bonds. Why do issuers continue to issue callable bonds anyway? EBay went pub
Explore the Thrift Savings Plan (TSP) web site at http://www.tsp.gov . Let's say you'd like to enroll in the TSP-explain why and what funds will you choose?(8-11 sentences).
The following are monthly percentage price changes for four market indexes MONTH DJIA S&P500 RUSSELL2000 NIKKEI 1 0.03 0.02 0.04 0.04 2 0.07 0.06 0.1 -0.02 3 -0.02 -0.01 -0.04 0.07 4 0.01 0.03 0.03 0.02 5 0.05 0.04 0.11 0.02 6 -0.06 -0.04 -0.08 0.0
1.Nico bought 100 shares of Cisco Systems stock for $24.00 per share on January 1, 2002. He received a dividend of $2.00 per share at the end of 2002 and $3.00 per share at the end of 2003. At the end of 2004, Nico collected a dividend of $4.00 per share and sold his stock for $18.00 per share. What was Nico's realized return du
1.The financial leverage multiplier is an indicator of a corporation utilizing 1.long-term debt. 2.total debt. 3.total assets. 4.operating leverage. 2.The analyst should be careful when conducting ratio analysis to ensure that 1.the same accounting procedures were used. 2.all of these 3.the d
I do a lot of work with smaller companies that are in severe financial difficulty. I constantly hear comments, from others, that bankruptcy is a "dodge" and it allows less than honest business owners to scam their creditors and emerge "clean". Do you think that the bankruptcy laws are necessary, are fair and are good for the
Business Finance: A firm is considering the replacement of an existing machine with a newer model...
A firm is considering the replacement of an existing machine with a newer model. The old machine was purchased 5 years ago. At that time, its cost was $7,500 and it was expected to have a useful life of 15 years. Its current book value is $5,000 while its current market value is only $1,000 The new machine will have a ful
1.Managing the firm's liabilities includes all of the following EXCEPT 1. cash. 2. accounts payable. 3. notes payable. 4. accruals. 2.The wealth of the owners of a corporation is represented by 1.earnings per share. 2.cash flow. 3.share price. 4.profits. 3.The financial manager may be
1. The controller is commonly responsible for 1. managing cash. 2. financial accounting. 3. financial planning. 4. managing credit activities. 2. Included in the primary activities of the financial manager are 1. making financing decisions. 2. financial analysis and planning. 3. all of these.
1. Wealth maximization as the goal of the firm implies enhancing the wealth of 1. the Board of Directors. 2. the federal government. 3. the firm's employees. 4. the firm's stockholders. 2. The difference between the cost of funds used to finance an investment and its after-tax operating profits is calle
1.The amount of money that would have to be invested today at a given interest rate over a specified period in order to equal a future amount is called 1. 1. present value interest factor. 2. 2. future value. 3. 3. present value. 4. 4. future value interest factor. 2.As the interest rate increases for any gi
1. Janice would like to send her parents on a cruise for their 25th wedding anniversary. She has priced the cruise at $15,000 and she has 5 years to accumulate this money. How much must Janice deposit annually in an account paying 10 percent interest in order to have enough money to send her parents on the cruise? 1. $2,234
1.________ is an expense that is a legal obligation of the firm. 1. Labor expense 2. Interest expense 3. Salaries expense 4. Rent expense 2. Under MACRS, an asset which originally cost $10,000 is being depreciated using a 5-year normal recovery period. What is the depreciation expense in year 3? 1. $1,200 2. $1,
1) No load mutual funds are normally promoted by ______. Load funds are promoted by ______. a registered representatives of a brokerage firm; registered representatives of a brokerage firm b registered representatives of a brokerage firm; the mutual fund of concern c the mutual fund of concern; registered representatives
Please see attached questions and provide spreadsheet to support. For the following question: "you would expect Swinton Mining dividend yield to Options: A Decrease B Stay the same C Increase Can you provide an explanation to that question
Analyze the corporate financial decision-making process at Lockheed Martin. Conduct a capital structure analysis in which you examine the various debt/equity instruments used by Lockheed Martin, as well as the impact on EPS, PE Ratios, and price per share.
Mr. Jones is 45 years old and is in good health. He is married, and has two children aged 17 and 18. He and his wife own all shares in a Limited Liability Company that owns a tavern and adjacent restaurant presently valued, based on future cash flow projections, at $5.9 million. The property around the tavern and restaurant
Check out a couple of mutual fund companies (e.g. vanguard.com, tiaa-cref.com) and analyze what types of funds and services they offer. What is the best mutual fund and which is the best mutual fund company? Explain (8-10 sentences).
Given the following cost elements, determine the total percentage in each of the four major quality cost categories. Please show each cost element's cost classification. Cost Element Amount ($) Incoming test and inspection 7,500 Scrap 35,000 Quality Training 0 Inspection 25,000 Test
During the past five years you owned two stocks that had the following annual rates of return: Year Stock A Stock B 1 0.18 0.09 2 0.6 0.04 3 -0.15 -0.11 4 -0.01 0.04 5 0.11 0.05 a) compute the arithmetic annual rate of return for each stock. Which stock is most desirable by this measure? b) Compute th