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How is financial leverage created? Describe how the degree of financial leverage is calculated.
Using the information in the previous question, consider a proposal to price the exports to Mexico in U.S. dollars and use the U. S. source for raw materials. Would this proposal eliminate the excha
An 8-month forward contract on a stock is currently priced at $84. The stock currently sells for $80. Assume that the risk-free rate of interest (with continuous compounding) is 10% per annum. Assum
For what range of six-month forward prices of gold does the trader have no arbitrage opportunities? Assume there is no bid-offer spread for forward prices.
How does your answer change if storage costs of 2% per annum are incurred? What is the profit (per ounce)?
A company is 30% financed by risk-free debt. The interest rate is 8%, the expected market risk premium is 6%, and the beta of the company's common stock is 0.69.
Why does the tax rate for a comprehensive consumption tax that is designed to replace an equal-yield comprehensive income tax have to be higher than the income tax rate? What is the impact on saving
In 2009, a $5 certificate from 1896 was sold for $10,500. What was the annual increase in the value of the certificate?
In 1985 U.S. Open winner won $150. In 2009, the winner won $1,350,000. What is the annual percentage increase in the winners prize money over this time period. If the winners prize increases at the
On the other hand, the 3 month LIBOR rate 2 months ago (when the last cash exchange occurred) was 4.00% per annum with quarterly compounding.
During the year, investment X generated cash flow of $1,500 and investment Y generated cash flow of $6,800. The current market values of investments X and Y are $21,000 and $55,000, respectively.
Currently, Warren Industries can sell 15-year, $1,000-par-value bonds paying annual interest at a 12% coupon rate. As a result of current interest rates, the bonds can be sold for $1,010 each; flota
DebtThe firm can sell for $980 a 10-year, $1,000-par-value bond paying annual interest at a 10% coupon rate. A flotation cost of 3% of the par value is required in addition to the discount of $20 pe
If you would be index funds, which ones? How about foreign investments?
You are given the following information for Calvani Pizza Co.: sales = $38,000; costs = $21,000; addition to retained earnings = $5,000; dividends paid = $1,500; interest expense = $5,000; tax rate
Scott is considering a project that will produce cash inflows of $2,100 a year for 4 years. The project has a 12 percent required rate of return and an initial cost of $6,000. What is the discounted
A project has an initial cost of $6,500. The cash inflows are $900, $2,200, $3,600, and $4,100 over the next four years, respectively. What is the payback period?
How may transactions costs and capital gains taxes affect your choices?
Market Value Ratios Lab R Doors' year-end price on its common stock is $43. The firm has total assets of $78 million, the debt ratio is 57%, no preferred stock, and there are 4.3 million shares of c
If the appropriate interest rate is 11 percent, what kind of deal did the running back scamper off with? Assume all payments other than the first $10.5 million are paid at the end of the year. &nbs
Prince Albert Canning PLC had a net loss of £30,782 on sales of £497,162.
Which of the following investments has a larger future value: Investment A an $1,000 investment earning 5% per year for 6 years? Or Investment B a %500 investment earning 10% per year for 6 years wi
which should be reflected in the yield on Treasury securities that are not indexed to the rate of inflation.
Mustaine, Inc., has a current stock price of $54. For the past year, the company had net income of $7,900,000, total equity of $26,300,000, sales of $50,500,000, and 4.1 million shares of stock outs
What is their present value to you? Round your answer to the nearest cent.