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Samson Enterprises increases its annual dividend by 2 percent per year. The common stock has a market price of $36.20 a share on a required return of 13 percent. How much did the company last pay a
Donner Inc will finance a proposed investment by issuing new securities while maintaining its optimal capital structure of 60% debt and 40% equity. The firm can issue bonds at a price of $950.00 be
Your company is considering the replacement of an old delivery van with a new one that is more efficient. The old van cost $40,000 when it was purchased 5 years ago.
The local fitness store allows customers to choose their payment plan when they purchase exercise equipment. For the treadmill you purchase, you have the option to pay $1,200 today or pay $500 toda
Suppose 1-year T-bills currently yield 7.00% and the future inflation rate is expected to be constant at 3.20% per year. What is the real risk-free rate of return?
Why construct financial forecasts? From a planning perspective, is it necessary to forecast the future as it relates to the organization as well as the industry as a whole?
Peter Metarko is extremely optimistic about the market for the new baby food. What is your advice for Pete? Should he or should he not invest in this start up?
A portfolio beta is a weighted average of the betas of the individual securities which comprise the portfolio. However, the standard deviation is not a weighted average of the standard deviations of
Outdoor Living needs $7.5 million to finance modifications to its production equipment because the design of its all-season tents has changed dramatically.
The Coffee Express has computed its fixed costs to be $0.34 for every cup of coffee it sells given annual sales of 212,000 cups. The sales price is $1.49 per cup while the variable cost per cup is $
Assume that the expected return on stocks is 12%, the standard deviation of stocks is 18%, and the riskfree rate is 5%. Given this information, an investor selects a portfolio with a 70% allocation
Team Sports has 4.4 million shares of common stock outstanding, 2.4 million shares of preferred stock outstanding, and 24 thousand bonds. If the common shares are selling for $3.40 per share, the pr
Trigen Corp. management will invest cash flows of $990,445, $394,241, $1,391,720, $818,400, $1,239,644, and $1,617,848 in research and development over the next six years.
Suppose that a company's equity is currently selling for $24.00 per share and that there are 4.80 million shares outstanding. If the firm also has 38 thousand bonds outstanding, which are selling at
Three firms have marginal costs of pollution abatement as described below. Without regulation, each firm would pollute 3 units. Under command and control regulation each firm gets to pollute 1 unit.
Both Company A and Company B are large public corporations with subsidiaries throughout the world. Company A uses a centralized approach and makes most of the decisions for its subsidiaries.
Jane Skinner has just graduated from college and would like to purchase her first car. She is unfamiliar with the purchasing process but thinks that she could probably afford to pay about $350 per m
What is an annuity? Discuss why it is considered a tax-sheltered investment. What do you have to give up in order to receive tax-favored treatment?
Discuss the type of individual securities or mutual funds that you believe are suitable for an aggressive investor whose primary investment goal is capital accumulation over the longer term (say 10
Edward wishes to save enough money to purchase a retirement lake cabin. he is willing to spend $500,000 for the cabin and he can save $25,000 per year and invest the money into an account earning 8.
On your first through fifth birthdays your parents placed $2,000 into your college fund (five total deposits of $2000 each). The account has earned an average of 8.0% per year until today, your twe
This is your chance to use your imagination! Create your own company and describe it. Then create the financial portion of your organization's strategic plan.
What is the WACC for a firm with equal amounts of debt and equity financing, a 15% before-tax company cost of capital, a 35% tax rate, and a 12% coupon rate on its debt that is selling at par value?
You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interest rate, with the first payment due in one month. What will your monthly paymen