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Johnson Enterprises Inc. is involved in the manufacture and sale of electronic components used in small AM/FM radios. The firm needs #300,000 to finance an anticipated expansion in receivables due t
The first is a 90% loan for 25 years at 9% interest and 1 point and the second is a 95% loan for 25 years at 9.25% interest and 1 point. Assume the loan will be held to maturity, what is the increme
You purchase 100 shares of stock for $38 a share. The stock pays a $2 per share dividend at year-end. What is the rate of return on your investment for the end-of-year stock prices listed below?
What net investment is required to acquire the ICX system and replace the old system? Compute the annual net cash flows associated with the purchase of the ICX system.
Kittie, Inc., has an issue of preferred stock outstanding that pays a $2.50 dividend every year, in perpetuity. If this issue currently sells for $69.85 per share, what is the required return?
"Investors believe that a certain stock will pay a $4 dividend next year. The market price of the stock is $66.67, and investors expect a 12 percent return on the stock. What long-run growth rate in
Sadik Inc.'s bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,050. What is their y
Tiny's Diet Supplements had earnings after taxes of $800,000 in the year 2008 with 200,000 shares of stock outstanding. On January 1, 2009, the firm issued 50,000 new shares
You used Dell as a pure play company to estimate the cost of capital for HCI. Are there potential problems with this approach in this situation?
So Much, Inc., has declared a $4.60 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the
Compute a 90% confidence interval for the population mean, based on the sample 25, 27, 23, 24, 25, 24, and 59. Change the number from 59 to 24 and recalculate the confidence interval.
At the 6-month point, what is the breakeven index price for a strategy of longing the market index at a price of 830? Interest rates are 0.5% per month.
What is the break-even point that an investor can obtain from a 6-month strategy employing a long 830 call and a short 850 call? Interest rates are 0.5% per month.
The Gecko Company and the Gordon Company are two firms whose business risk is the same but that have different dividend policies. Gecko pays no dividend, whereas Gordon has an expected dividend yiel
You own 1,000 shares of stock in Avondale Corporation. You will receive a $2.30 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $53 per share.
Mack's Mild Lemonade has taken a five year project with an NPV of $4,500. If the discount rate on the project is 12 percent, then what is the equivalent annual annuity for the project?
How might management practices speed up or slow down the collection of receivables? How have recent changes in the banking industry influenced the collection process? Provide examples.
Weisbro and Sons common stock sells for $21 a share and pays an annual dividend that increases by 5% annually. The market rate of return on this stock is 9%. What is the amount of the last dividend
A portfolio consists of stocks A and B. Stock A is valued at $3,240 and has an expected return of 10.5 percent. Stock B has an expected return of 14.7 percent. What is the expected portfolio return
Your firm purchased machinery with a 7 year MACRS life for $15 million. The project will end after 5 years. If the equipment can be sold for $3 million at the completion of the project, and your fir
Medtrans is a profitable firm that is not paying a dividend on its common stock. James Weber, an analyst for A. G. Edwards, believes that Medtrans will begin paying a $1.00 per share dividend in two
Ironwood Boats, Inc. has taken a project that has reduced working capital needs of $12,000 last year as well as $23,000 this year. What should be the terminal cash flow at the conclusion of the proj
Preferred stock is normally expected to provide steadier, more reliable income to investors than the same firm's common stock, and, as a result, the expected after-tax yield on the preferred is low
Based on the following information, calculate the sustainable growth rate for Hendrix Guitars, Inc.:
The spot price of the market index is $900. A 3-month forward contract on this index is priced at $930. The market index rises to $920 by the expiration date.