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What is the operating income (EBIT) for both firms?b. What are the earnings after interest?c. If sales increase by 10 percent to 11,000 units, by what percentage will each firm's earnings after inte
In 400 words respond to the following questions with your thoughts, ideas, and comments: Understanding the differences between the stock market and the bond market is essential to managing corporati
What are three methods for estimating the cost of common stock from retained earnings? Which of these methods provides the most accurate and reliable estimate?
Fasco Industries just paid a dividend of D0 = $1.45. Analysts expect the company's dividend to grow by 28% this year, by 11% in Year 2, and at a constant rate of 6% in Year 3 and thereafter. The req
Given the following statement, please indicate whether it is true or false, and why: "The relationship between operating and financial leverage is additive rather than multiplicative" (Limit your an
Calculate the weighted average cost of capital. Explain your answer. Calculate the cost of debt. Explain your answer. How would you restructure the firm's debt? Explain your answer. Please used at l
Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
One has a life of 6 years and the other a life of 10 years. Would the failure to employ some type of replacement chain analysis bias an NPV analysis against one of the projects? Explain.
In what sense is a reinvestment rate assumption embodied in the NPV, IRR, and MIRR methods? What is the assumed reinvestment rate of each method?
Explain why the NPV of a relatively long-term project, defined as one for which a high percentage of its cash flows are expected in the distant future.
You have been entrusted with monies for investment. Given current conditions on global markets what combination of assets would you combine together in a portfolio to ensure your portfolio is fully
Metacorp Limited plans to raise new capital for its project in Queensland. You are employed to estimate its cost of capital for use in capital budgeting decision.
A coupon rate of 9 percent, paid annually. The tax rate is 40 percent. If the flotation cost is 2 percent of the issue proceeds, what is the after-tax cost of debt?
Derive the functional relationship between the no arbitrage values of the two vertical spreads, C(K1)-C(K2) and C(K2)-C(K3)?
This is the present yield to maturity on the bonds. The common stock sells at a price of $60 per share. Calculate the firm"s market value capital structure.
East Midland Furniture' (EMF) manufacturer is aiming to expand their business in the UK by establishing a new production plant in London. This project will cost the company GBP 50 millon.
Radiant Laundry Products Company is a leading producer of laundry detergent. Radiant produces two major product lines; one is a low-suds, concentrated powder detergent and the other is a more tradit
Calculate the next expected dividend per share, D1. (D0= 0.4($6.50) = $2.60.) Assume that the past growth rate will continue. What is the cost of equity, rs, for the Bouchard Company?
The stock is selling on the market for $97.00, and Trivoli must pay flotation costs of 5 percent of the market price. What is the cost of the preferred stock for Trivoli?
Find the component costs of debt, preferred stock, and common stock. Assume LCI does not have to issue any additional shares of common stock.
What types of securities must be issued by a firm which is on the growing stage in order to meet the financial requirements?
How do sinking funds reduce default risk? What is a stock dividend? How does this differ from a stock split?
Compute the following values and ratios for 2012. (We provide the results from 2011 for comparative purposes.) Working capital. (2011: $160,500)
Suppose you are buying your first condo for $145,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.
Polycorp Limited Steel Division is considering a proposal to purchase a new machine to manufacture a new product for a potential three year contract. The new machine will cost $1 million.