Taussig Technologies Corporation (TTC) has been growing at a rate of 20% per year in recent years. This same supernormal growth rate is expected to last for another 2 years (g1 = g2 = 20%). a.) If D0 = $1.60, rs = 10%, and gl = 6%, then what is TTC's stock worth today? What is expected dividend yield and its capital gains y
Several years ago, Rolen Riders issued preferred stock with a stated annual dividend of 10% of its $100 par value. Preferred stock of this type currently yields 8%. Assume dividends are paid annually. a.) What is the value of Rolen's preferred stock? b.) Suppose interest rate levels have risen to the point where the pre
Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D=$1.50). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, r, is 15%. What is the value per share of Boehm's stock?
What factors should be considered in price setting? Which is most important? Why?
1. McKinnley Corporation is developing a plan to finance its asset base. The firm has $5,000,000 in current assets, of which 20% are permanent, and $12,000,000 in fixed assets. Long-term rates are currently 9.5%, while short-term rates are 7%. McKinnley's tax rate is 30%. a. Construct a conservative financing plan with 80
Please help with the following problem. Many times managers need to make decisions on what equipment to buy and how to finance it. Suppose you are in the market for a new car for your business. Choose a vehicle that will suit your needs. You have the cash to pay for it if needed. You can buy the car with cash or finance
Discuss whether or not you feel the following topics are relevant to Non-Profit Organizations. Discuss how you feel these topics are similar or different in a Non-Profit Organization. 1. ethics 2. capital budgeting 3. strategic planning 4. financial ratios 5. EFN 6. cash flows and other financial statements You may
1- You wish to sell short 100 shares of XYZ Corporation stock. If the last two transactions were at 34.10 followed by 34.15, you only can sell short on the next transaction at a price of : a. 34.10 or higher. b. 34.15 or higher. c. 34.15 or lower. d. 34.10 or lower. 2- Stocks A, B, and C have the same expected return an
What calculations and ratios should a firm utilize to ensure it is competing at a high level? Why?
You have finally saved $10,000 and are ready to make your first investment. You have the three following alternatives for investing that money: ? A CBS bond with a par value of $1,000, an interest rate of 7.625, and a maturity of 10 years. The bond is selling for $986 ? Alabama Power Company preferred stock with a $50 par
Why would a company raise funds with preferred stock instead of debt? One of the reasons they are issued with preferences is because they also have restrictions compared to common shares. The restrictions commonly include: - no voting rights or say in the makeup of the board of directors - no requirement for any payment o
In the summary of the preferred stock vs. common stock, one of the things mentioned was that "Preferred stockholders do not participate in the earnings of the company beyond the stated rate in the way that common stockholders do." This is not always the case. Sometimes preferred stock is structured so that they will share in
Exercise 5.8 Cash discounts- ROI a. Calculate the approximate annual rate return in investment of the following cash discount: 1. 1/15, n30. 2. 2/10, n60. 3. 1/10, n90. b. Which of these terms, if any, is not likely to be a significant incentive to the customer to pay promptly? Explain your answer. Exercise 5.10 Not
A company purchased a new factory machine for $650,000. The machine is expected to be productive for 5 years and, at the end of the 5 years, it is expected to be worth $50,000 in salvage value. The machine manufactures widgets and is expected to produce 5 million widgets over its productive life. As it eventually turned out,
This company is considering a replacement of an old delivery van with a new one that is more efficient. The old van cost $30,000 when it was purchased 5 years ago. The old van is being depreciated using the simplified straight line method over a useful life of 10 years. The old van could be sold today for $5,000. The new van has
Hanson Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,800,000 on March 1, $1,200,000 on June 1, and $3,000,000 on December 31. Hanson Company borrowed $1,000,000 on March 1 on a 5-year, 12% note to help finance construction of the building. In addit
The Tropical Paradise Resort is located on the coast of an exotic island in the Pacific Ocean. The room rates are $300 a night. If you have a room, you also have free access to the pool, gym and tennis courts. The resort offers also the following services: - aerobics classes ($5 per class) - therapeutic massages ($40 per
The ABC Corporation is considering a project which has an up-front cost paid today at t = 0. The project will generate positive cash flows of $70,000 a year at the end of each of the next five years. The project's NPV is $90,000 and the company's WACC is 12 percent. What is the project's simple, regular payback?
Please see attached document. Develop prices using Excel Solver - Lindo is OK, but Excel Solver is much preferred so that changes can be made. You will need baselines in terms of units. Please feel free to make the following assumptions for a period of 1 year: # of units (basic license products): 350 # of units (ente
I am in dire need of help on this work. Thanks! Merchants Bank offers to lend you $30,000 at a nominal rate of 6.0%, simple interest, with interest paid quarterly. Gold Coast Bank offers to lend you the $30,000, but it will charge 7.0%, simple interest, with interest paid at the end of the year. What's the difference in the
Given the data below, calculate the expected return, variance, and standard deviation of the following company. In a recessionary economy, which is expected to occur with a 30% probability, the expected returns would be -5% In an expanding economy, with an expected probability of occurrence of 20% the expected return would
Pennington's has annual sales of $1.46 million. The cost of goods sold is equal to 78 percent of sales. The firm has an average accounts receivable balance of $148,900 and an average accounts payable balance of $163,500. How many days on average does it take the firm to pay its suppliers?
Pennington's has annual sales of $1.46 million. The cost of goods sold is equal to 78 percent of sales. The firm has an average accounts receivable balance of $148,900 and an average accounts payable balance of $163,500. How many days on average does it take the firm to pay its suppliers?
High Mountain Gear issued 240,000 shares of stock last week. The underwriters charged a 7.85 percent spread in exchange for agreeing to a firm commitment. The legal and accounting fees were $385,000. The company incurred $98,000 in indirect costs related to management time and other internal expenses. The offer price was $21 a s
Henry Hawkins owns 20 percent interest in the HI Partnership. On July 1 he sold 100 shares of stock of IPR Corporation to the partnership for $10,000, its fair market value. The stock had cost him $5,000 10 months prior to the sale. How much and what character of profit must Henry report on this sale currently?
Seaside Company manufactures and sells small sailboats. Its annual sales are $3.0 million (30 sailboats at $100,000 each). Because of the need to be near the ocean, the company's fixed costs are high, $1.0 million. The variable cost ratio is 30 percent. The owner, Stan, has financed the business with $1.2 million bank loan at 7
Global Pistons (GP) has common stock with a market value of $200 million and debt with a value of $100 million. Investors expect a 15% return on the stock and a 6% return on the debt. Assume perfect capital markets. a. Suppose GP issues $100 of new stock to buy back the debt. What is the expected return of the stock after t
Howard Beal co. manufactures molds for casting aluminum alloy test samples. Fixed costs amount to $20,000 per year. Variable costs for each unit manufactured are $16. Sales price per unit is $28. a. What is the contribution margin of the product? b. Calculate the break-even point in unit sales and dollars. c. What
1. Suppose you are a county commissioner faced with deciding how many public health nurses to employ within the county. The following table shows total benefits and total costs from different levels of employment. Fill in the table and answer the questions: Number of public health Total
Write a paper in which you compare and contrast three potential financial outcomes you envision for the initiative I have everything I need except one compare and contrast. The company is JP Morgan Chase & Co. I seem to have reached a road block. Please include in text citation as well as resource information.