1. What is the sustainable growth rate of a firm with the following selected financial results? Sales $20,300 Earnings after taxes $1,015 Equity multiplier 2X Assets $10,150 Annual Dividend $406 a. 12% b. 8% c. 10% d. 6% 2. Stock and bond markets a. are independent of each other as to prevailing ra
Illumina Inc. makes cardboard signs. The most popular signs they make are the Bronx, and Veterans, which require material and labor. They have a contract with Devon Publishing to make 1600 of the Bronx, which sell for $ .75 and require 20 ounces of paper and 5 minutes of labor. They plan on making 2000 of the Veterans, which sel
Problem: A company decides to buy new equipment for $10,000 with an expected useful life of 4 years. At the end of each of the 4 years, the cash flow from this equipment is expected to be $4000. the rate of return in 8%, what is the ROI?
Given that Humphrey Dog Toys Inc.'s stock is currently selling for $50 a share, calculate the amount that Elmer D. will make, or lose, on each of the following transactions (assume that all transactions involve 100 shares of stock, and ignore brokerage commissions.) a. If Elmer sold the stock short at $50 per share and repu
Illinois Tool Company's (ITC) fixed operating costs are $1,260,000 and its variable cost ratio (ie variable costs as a fraction of sales) is 0.70. The firm has $3,000,000 in bonds outstanding at an interest rate of 8%. ITC has 30,000 shares of $5 preferred stock and 150,000 of common stock outstanding. ITC is in the 50%
Highland Cable Company is considering an expansion of its facilities. Highland Cable is currently financed with 50 percent debt and 50% equity common stock par value of $10.To expand the facilities Mr Highland estimates a need for 2 million in additional financing. His investment banker has laid out three plans 1. Sell $2mill
The lottery is $60,000,000 and the state offers to pay you $3,000,000 per year for the next 20 years, or you can take the lump sum today of $29,500,000. If you choose to take the $3,000,000 per year for 20years, the state will invest that $29,500,000 today so that it can give you those payments per year for 20 years. What rate w
Investment opportunities and the associated risk based on India's present business climate. This could be public, private, joint venture business relationship with USA company.
The Beasley Corporation has been experiencing declining earning, but has just announced a 50 percent salary increase for its top executives. A dissident group of stockholders wants to oust the existing board of directors. There are currently 11 directors and 30,000 shares of stock outstanding. Mr. Wright, the president of the co
Q1 You have ?500,000 available to invest. The risk-free rate (which is also the rate at which you could borrow) is 8%, and there is a (risky) fund in which you could invest that has an expected return of 16%. What would you have to do to produce a portfolio with an expected return of 22%? Q2 In a world in which your investme
Suppose you won the lottery and were offered a choice of either $500,000 in cash or a gamble in which you would get $1 million if a head were flipped but zero if a tail came up. a) What is the expected value of the gamble? b) Would you take the sure $500,000 or the gamble? c) If you choose the sure $500,000, are you
International Finance : Scenarios for Handling Payment and Probable Cost and Weighted Average Cost of Capital ( WACC )
The purchasing department has found an excellent global positioning system circuit card in Germany that can provide your firm with a competitive advantage in the marketplace. Delivery of the circuit card is 6 months from date of order. The German firm has offered your firm a 3% discount on the 2.5 million (euros) purchase if pai
The case is THOR POWER TOOL CO. v. COMMISSIONER, 439 U.S. 522 (1979) I included the format & list of doctrines. I would appreciate any help. I am just not experienced in this area and need an example to look over.
1) What are the primary responsibilities of a corporate financial staff? 2) Is stock price maximization good or bad for society? 3) Is maximizing stock price the same thing as maximizing profit?
Consider an America Off-Line 30 year, semiannual bond. It is issued at par (coupon rate = 6%) today. Interest rates remain at 6% for 5 years, and then GRADUALLY, over 5 years rises to 7%, Then interest rates GRADUALLY fall over 10 years, reaching 5% when the bond has 10 years to maturity remaining. Interest rates then rem
McGonnigal, InMcGonnigal, Inc. has expected sales of $40 million. Fixed operating costs are $5 million and the variable cost ratio is 65 percent. McGonnigal has outstanding a $10 million , 10 percent bank loan amd $3 million in 12 percent coupon-rate bonds. McGonnigal has outstanding 250,000 shares of $10 (dividend) p
13-3 Risk analysis a. Given the following information, calculate the expected value for Firm C's EPS. Data for Firms A and B are as follows: E(EPSA) = $5.10, and Standard Deviation of Firm A = $3.61; E(EPSB) = $4.20, and Standard Deviation of Firm B = $2.96.
Your company's weighted average cost of capital is 11%. You believe the company should make a particular investment, but the IRR of this investment is only 9%. What arguments might exist in support of your position? Is it really possible that making an investment with a return below your firm's cost of capital can ever c
I. Question Details: Spreadsheet Exercise: Jane is considering investing in three different stocks or creating three distinct two-stock portfolios. Jane considers herself to be a rather conservative investor. She is able to obtain forecasted returns for the three securities for the years 2007 through 2013. The data are a
Earnings per share, degree of financial leverage (DFL), degree of operating leverage, and degree of total leverage
Winners Inc., a home appliances manufacturer, expects sales of 20,000 units at $5 per unit in the coming year and must meet the following obligations: Variable operating costs of $2 per unit, fixed operating costs of $10,000, interest of $20,000, and preferred stock dividends of $12,000. The firm is in the 40% tax bracket
Using historical daily returns, you estimated the following Index model for ET incorporated: rET = .01% + 1.75 r S&P500 On February 15, 2007, ET announced its intention to buy back 1,000,000 of its 5,000,000 outstanding shares in the open market. ET stock price closed 3% higher than the close on February 14. How much of the
Your company is expected to earn $4.0 million in net income next year of which it will pay out 40% in dividends. If equity represents 50% of your capital, what is the breakpoint on the MCC where new stock will have to be issued? a. $2.4 million b. $3.2 million c. $4.0 million d. $4.8 million e. $8.0 million
Omega Sports has the following equity accounts on its balance sheet: Common stock ($.50 par, 900,000 shares) $ 450,000 Paid in excess 5,580,000 Retained earnings 21,204,000 Total common stockholders' equity $27,234,000 The current market price of the firm's shares is $20. If the firm declares
Problem 1: A loan was made 10 years ago with an original balance of $1,000,000.00 at a fixed interest rate of 8.00% with equal monthly payments for 30 years. A. How much is the monthly payment? B. What is the balance today? C. What will the balance be at the end of 5 more years? D. When will the balance be paid down to 50
1) A year ago, a friend of yours made a loan to a reliable local business you have both known for many years. The business is doing well, and looks very likely to pay back the loan. Your friend now needs to raise some cash urgently for other business investments, and wishes to sell her loan on to someone. Interest rates are 5% a
The Seneca Maintenance Company currently (as of year 0) pays a common stock dividend of $1.50 per share. Dividends are expected to grow at a rate of 11% per year for the next four years and then to continue growing thereafter at a rate of 5% per year. What is the current value of a share of Seneca common stock to an investor w
Solving Financial Accounting Problems Using Microsoft Excel for Windows by Rex A Schildhouse. See attached file for full problem description. Problem P2-3A, Chambers Brokerage Services, Inc. was formed on May 1, 2006. The following transactions took place during the first month. 1. Stockholders in
Help identify debits, credits, and normal balances. E2-1 H. Burns, Inc. Account Debited Account Credited Date Basic Type Specific Amount Effect Normal Balance Basic Type Specific Amount Effect Normal Balance Jan. 2 Asset Cash Increase Debit Stockholders Equity Common Stock Increase C
See attached file for full problem description. Managerial Finance Week 4 Dropbox Chapter 6 Stock X a) b) Stock Y a) b) Probability Return Rate/Return Stand Dev Probability Return Rate/Return Stand Dev 0.1 -0.1 0.2 0.02 0.4 0.2 10 0.2 7 1.4 0.4 15 0.
Elston Corporation is authorized to issue 1,000,000 shares of $1 par value common stock. During 2002, its first year of operation the company has the following stock transactions: Jan 15 Issued 500,000 shares of stock at $5 per share Jan 30 Attorneys for the company accepted 500 shares of common stock as payment of legal ser