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Define cash conversion cycle (CCC) Explain why, holding other things constant, a firms profitability would increase if it lowered its CCC.
The Chen Company is considering the purchase of a new machine to replace an obsolete one. The machine being used for the operation has both a book value and a market valuse of zero;
What is the modified internal rate of return? An approximation from Appendix B is adequate. (You do not need to interpolate.) Assume the traditional internal rate of return on the investment is 14.9
Blease Inc. has a capital budget of $625,000, and it wants to maintain a target capital structure of 60% debt and 40% equity. The company forecasts a net income of $475,000. If it follows the resid
Heron Enterprises, Inc. has been considering the purchase of a new manufacturing facility for $120,000. The facility is to be fully depreciated on a straight-line basis over seven years. Calculate t
The interest rate on the debt will be 10 percent. What are the earnings per share at the break-even level of earnings before interest and taxes? Ignore taxes.
If 10-year T-bonds have a yield of 3.70%, 10-year corporate bonds yield 7.30%, the maturity risk premium on all 10-year bonds is 0.90%, and corporate bonds have a 0.2% liquidity premium versus a zer
What is the average expected inflaction rate over the next 4 years? What is the yield on a 4-year Treasury bond? What is the yeild on a 4-year BBB-rated corporate bond with a liquidity premium of 0.5%
Centennial Brewery in 2006 produced revenues of $1,145,227. It has expenses (excluding depreciation) of $812,640, depreciation of $131,335, and interest expense of $81,112. It pays a marginal tax ra
You have just purchased a new warehouse. To finance the purchase, you've arrranged for a 30-year mortgage loan for 80% of the $2,600,000 purchase price. The monthly payment on this loan will be $11,
GenTech Pharma has reported the following information: Sales/Total Assets = 2.89; ROA = 10.74%; ROE = 20.36%. What are the firm's profit margin and equity multiplier?
Thirsty Cactus Corp. just paid a dividend of $1.25 per share. The dividends are expected to grow at 28 percent for the next eight years and then level off to a 6 percent growth rate indefinitely. If
What are the four elements of a firm's credit policy? To what extent can firms set their own credit policies as opposed to accepting policies that are dictated by its competitors?
Calculate the expected portfolio return, for each of the 6 years. Calculate the average expected portfolio return, for each of the 6-year period. Calculate the standard deviation of expected portfolio
What is a Eurodollar? If a French citizen deposits $10,000 in Chase Bank in New York, have Eurodollars been created? What if the deposit is made in Barclays Bank in London?
If the United States imports more goods from abroad than it exports, then foreigners will tend to have a surplus of U.S. dollars. What will this do to the value of the dollar with respect to foreign
Show the new balance sheet under both alternatives. For Alternatives 2, show the balance sheet after exercise of the warrants. Calculate the president's ownership position for both alternatives. He do
What would be the derpciation expense be each year under each method? Which depreciation method would producte the higher NPV, and how much higher would it be?
Williams Oil Company has a return on stockholders' equity of 18 percent during 2006. Its total asset turnover was 1.0 times, and its equity multiplier was 2.0 times. Calculate the company's net prof
In 2008 the MKA Corporation reports EPS of $5.75, ROE equals 15% and the company has a dividend payout ratio of 60%. Calculate the dividend growth rate.
A U.S. firm purchase raw material on credit and has to pay ¥10 million three months from now. The spot exchange rate is ¥95/$ and the forward rate is ¥96/$. Is the yen selling at a forwa
Fairchild Garden Supply expects $600 million of sales this year, and it forecasts a 15% increase for next year. The CFO uses this equation to forecast inventory requirements at different levels of s
China American Manufacturing has a beta of 1.50, the risk-free rate of interest is currently 12 percent, and the required return on the market portfolio is 18 percent.
Assume that the risk -free rate is 55 and the market risk premium is 6%. What is the expected return for the overall stock market? What is the required rate of return on a stock with a beta of 1.2?
In March 2005, General Electric (GE) had a book value of equity of $113 billion, 10.6 billion shares outstanding, and a market price of $36 per share. GE also had cash of $13 billion, and total debt