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Debt versus Equity Financing

Debt versus Equity Financing "Why do things have to be so complicated?" said Bob to Andrew, as he sat at his desk shuffling papers around. "I need you to come up with a convincing argument." Bob's company, Symonds Electronics, had embarked upon an expansion project, which had the potential of increasing sales by about 30% pe

Investment More Likely to Reduce Risk

The owner a pro football team plans to diversify by purchasing shares in either a company that owns a pro basketball team or a pharmaceutical company. Which of these two investments are more likely to reduce the overall risk the owner will face? Why?

Forecasted Sales and its Affect on Balance Sheet - EEM Inc

EEM, Inc. has the following balance sheet: EEM, Incorporated Balance Sheet as of 12/31/X0 Assets Liabilities and Equity Cash $ 1,000 Accounts payable $ 5,300 Accounts receivable 7,200 Bank note payable 3,200 Inventory 6,100 Long-term assets 4,200 Equity 10,000 $18,500 $18,500 It has estimate

Finance: Bond Valuation

An investor has two bonds in his portfolio that have a face value of $1000 and pay a 10% annual coupon. Bond L matures in 15 years, while bond S matures in 1 year. a. What will the value of each bond be if the going interest rate is 5%, 8%, and 12%? Assume that only one more interest payment is to be made on Bond S at its mat

Accounting/Finance Analysis

A fund manager states: "I refuse to buy any company that makes a voluntary accounting change, since it's certainly a case of management trying to hide bad news." Can you think of any alternative interpretation?

conservatism principle analysis

The conservatism principle arises because of concerns about management's incentives to overstate the firm's performance. Consider the statement: "We could get rid of conservatism and make accounting numbers more useful if we delegated financial reporting to independent auditors, rather than to corporate managers." Do you agree?

FASB and SEC: Finance Analysis

To what extent is it a valid position that we should get rid of the FASB and SEC, since free market forces will make sure that companies report reliable information? Provide justification for your response.

The Best Standards

Consider the statement: "The best standards are the ones that eliminate all management discretion in reporting. That way one gets uniform numbers across all companies and don't have to worry about doing accounting analysis." Do you agree? Why or why not?

Case analysi of systematic or unsystematic

It has been a little over 1 year since the collapse of Lehman Brothers which was the first major event in the downturn of our stock market and economy. In the past year we have witnessed some fairly significant financial events ~ would you categorize these events as the result of systematic or unsystematic risk? Why? (at least

Systematic and Unsystematic Risk

What is the difference between systematic and unsystematic risk? How can diversification help reduce unsystematic risk? Can systematic risk be mitigated? Why and why not? (at least 200 word). Please properly cite your references.

Finance Problem

Please help with the attached problem. Thank you. Stocks A and B have the following historical returns: Year Stock A's Returns, Stock B's Returns 2001 -18.00% -14.50% 2002 33.00 21.80 2003 15.00 30.50 2004 0.50 (7.60) 2005 27.00 26.30 a. Calculate the average rate of r

Business Finance: Stock, Tax, Interest

10. Mr. Frost controls proxies for 32,000 of the 60,000 outstanding shares of Express Frozen Foods, Inc. Mr. Cooke heads a dissident group that controls the remaining 28,000 shares. There are seven board members to be elected and cumulative voting rules apply. Frost does not understand cumulative voting and plans to cast 80,

Financial Problems

Nast Store has derived the following consumer credit scoring model after years of data collecting and model testing: Y = (0.20 x EMPLOYMT) + (0.4 x HOMEOWNER) + (0.3 x CARDS) Where: EMPLOYMT = 1 if employed full-time, 0.5 if employed part-time, and 0 if unemployed HOMEOWNER = 1 if homeowner, 0 otherwise CARDS = 1 if presentl

Lott Manufacturing: Quantity Discounts

Lott Manufacturing Inc. has been ordering parts for its production process in lots of 10,000 units. Each order costs the firm $50 to place, and holding costs per unit average $3. Lott uses 200,000 units every 250 days. Lott Manufacturing was recently approached by its supplier with a new quantity discount program. The supplie

Scenario Summary in Microsoft Excel

JumboMags makes an exceptional line of magnetized wheels that custom car builders use in kits. They provided you with the following information: Product: A13847 - Jumbo Mag Selling Price at $185.00/unit Variable Cost: $87.50 Fixed Cost: $250,000 Units Sold Last year: 10,800 JumboMags gave you the following po

Unit 5 - Statement of Cash Flows

4-5 paragraphs Details: Your friend Lucy slept through a class in which her professor explained the concepts of depreciation and amortization. Use the Library's Accounting links and/or dictionary sources and the Internet to learn about these concepts, and then write a 4-5 paragraph explanation of the concepts for Lucy. Be

Financial Aspects of Marketing Management

The group product manager for ointments at American Therapeutic Corporation was reviewing price and promotion alternatives for two products: Rash Away and Red Away. Both products were designed to reduce skin irritation, but Red Away was primarily a cosmetic treatment whereas Rash Away also included a compound that eliminated a

Select a product or service- compare the prices

Select a product or service. Then select two different organizations that provide your selected product or service and compare the prices associated with your selected product or service. 1. What accounts for the difference between the prices among the different organizations? 2. What is the marketing rationale for this differen

Trade Credit Terms and APR

Suppose you are offered trade credit term of 1.5/15, net 50. ( Calculate both the APR and APY of the cost of trade credit)Using the information what would be the APR cost if you "stretched" the payable and paid after 75 days. (Show work)


Co. A is about to pay a dividend of $3.15 per share. Its future EPS and dividends are expected to grow with inflation, which is forecasted at 3% per year. What is the company's stock price? The nominal cost of capital is 10%.

Break-Even Point for an Off-Broadway Theater

Letitia Green own a small, independent off-Broadway theater. Her theater is about to begin performing a new play titled "Franklin County Blues." Letitia has invested her own funds to get the play off the ground, and wants to know how many tickers need to be sold before the theater breaks even. Information about the play follow

Total Assets Turnover Ratio

Trentham product currently has $2,000,000 in account receivable and its days sales outstanding is 33 days. if accounts receivable comprises half of the firm's current assets and Trentham has $6,000,000 in net fixed assets, what is Trentham's total assets turnover ratio?

Shareholder in a Profitable Company

I am having problems retaining many information in finance. Here is the question: If you are a shareholder in a profitable company, would you expect a dividend to be paid, or would you be satisfied if all earnings stayed within the organization as retained earnings? Explain I need help with this question.

Stock investment and Current Investments

Assuming you purchased a share of stock for $50 one year ago, sold it today for $60, and during the year received three dividend payments totaling $2.70, calculate the following: a) Current income b) Capital gain/loss c) Total return 1) in dollars 2) as a percentage of the initial investment.


You have estimated the following probability distributions of expected future returns for Stock X and Y: Stock X Probability Return Stock Y Probability Return 0.1 -10% 0.2 2% 0.2 10% 0.2 7

Technical College

A. Technical College received $3,445,553 in state aid on September 15 for the fall academic semester. The Vice-president for finance decided to invest $2,000,000 in a 2-month investment that pays 11.5% simple interest. How much interest will the College earn on the investment?